As seen between the Short Term Insurance Act 53 of 1998, the Insurance Act 18 of 2017 and the Financial Advisory and Intermediation Services Act 37 of 2002, the South African insurance industry has been substantially regulated. The above acts have over the years implemented provisions to more strictly regulate role players within the South African insurance industry. But concern is given to players who are part of the South African insurance scene but originate from an international company based in the United Kingdom.
This research aims to evaluate the Lloyd's of London coverholder within the South African insurance industry.
Introduction
- Problem statement
- Research question and aims
- Case study
- Research outline
The provisions of the Short-Term Insurance Act 53 of 1998 (hereinafter STIA) and the Long-Term Insurance Act 52 of 1998 (hereinafter LTIA) are also essential and taken into account, as certain actors in the insurance industry are defined and regulated within the framework of the aforementioned Acts. 8. There is no definition of a Lloyd's of London cover holder in the Insurance Act or the FAIS Act.17 This is a concern and should be addressed as it is one of the five actors in the Lloyd's of London structure18 and Lloyd's market functions within South Africa.19 Therefore, academic analysis required to evaluate the various players in the South African insurance sector. For a critical discussion of which role players can be compared to a Lloyd's of London cover holder, the most important thing is to determine whether the Lloyd's of London cover holder is regulated.
In Chapter 4, further analysis from the provisions of the FAIS Act is made on the role actors play within the South African insurance market.
Role players in South African Insurance Law
- Introduction
- Insurer
- Reinsurer
- Intermediary
- Broker
- General Insurance Binder Holders
- Underwriting managers
- Foreign type of insurers
- Conclusion
This makes it clear that the Insurance Act regulates the tasks of the insurance company. Since the insurer can only cover R of the insured risk, the insurer and the reinsurer enter into separate reinsurance contracts to agree. As stipulated in Article 5(1) of the Insurance Act, the following requirements must be met: 124.
The above discussion shows that more than one role player is involved in the insurance business.
The Lloyd's role players
- Introduction
- An overview of Lloyd's within the South African
- History of the South African insurance market
- How to become part of Lloyd's business within South Africa
- How is Lloyd's of London governed and regulated in the
- Structure of Lloyd's of London
- Lloyd's Brokers
- Lloyd's Underwriter
- Managing agents
- Lloyd's Coverholders
- Conclusion
Lloyd's of London cannot function without the help of other role players.135 As previously explained, "Lloyd's is not an insurance company, nor does it issue insurance policies itself."136 The purpose of this chapter is to set out how Lloyd's of London is part of the South African insurance industry. It was only later in 1998 that Lloyd's of London established a branch office in South Africa to conduct underwriting business within the South African insurance market.137. After the 1943 amendment to the Insurance Act had been implemented, Lloyd's representatives157 were required to pay a higher deposit.158 In addition, premiums disbursed as a result of Lloyd's business had to be paid into the banks of South Africa, this way. , there was more certainty for the insured to receive claim money as the money was held within the jurisdiction of South Africa.159.
In 1988, Lloyd's was "admitted as a registered South African insurer", meaning that the description of Lloyd's of London changes from foreign to local insurer.164 Lloyd's has therefore been part of the South African Special Risks Insurance Association (Sasria). 165 In 1998 the Lloyd's office opened in Johannesburg, and the purpose of this office was to handle all relevant administrative tasks.166. To be part of the Lloyd's business/market it is essential that one first becomes accredited by Lloyd's of London. Once the petitioner has been accepted, the tribunalization process is complete.169 The foregoing relates only to Lloyd's of London's process of allowing someone to become part of the Lloyd's syndicate.
227 Definitions By-law 7 of 2005 in terms of the Lloyd's Act 1982; Lloyd's 2020 https://www.lloyds.com/market-resources/delegated-authorities/compliance-and-. It would appear that these are obvious duties of the cover holder, which will not be expressly mentioned in the binding authorization. It was clear in the discussion above that Lloyd's of London forms part of the South African insurance market.
In interpreting the function of each role player, it was clear that each is part of the larger international Lloyd's community. This research continues with the evaluation of the role players as defined in the FAIS Act.
FAIS Act
- Introduction
- Definitions of the FAIS Act
- Financial Service Provider
- Client
- Product Supplier
- Financial product
- Intermediary Services
- Representative
- Exempt
- Chapter II and III of the FAIS Act discussed
- Conclusion
The same was confirmed in Article 1 of the FAIS Act, where the definition of an. 34; "authorised financial services provider" is a person licensed within the meaning of Chapter II of the FAIS Act to provide financial services to others.245 An excellent example of an authorized FSP was seen in the case of Financial Conduct Authority v JP Markets SA (Pty) Ltd 2020 JOL 48411 GJ.Respondent was the FSP as it was licensed under the Act and was the "key person who supervises and manages the activities of the FSP".246.
In the case of First National Bank, A Division of First Rand Bank Limited v Commission for Conciliation, Mediation and Arbitration, it was the responsibility of the FSP (the. 246 Financial Sector Conduct Authority v JP Markets SA (Pty) Ltd 2020 JOL 48411 GJ 3. . applicant ) to ensure that its representatives were fit and proper under the FIAS Act.247. For example: Watersure (Pty) Ltd, a company that agreed to provide insurance to "applicant's metered water consumers" was considered a product supplier under the FAIS Act.255.
For example, undertakers and/or undertakers are seen as intermediary services as they assist an insurer with the administration of policies.261 It is also further required that these companies have a license in terms of the FAIS Act as they fall within the requirements. of the Act.262 Intermediaries can also be interpreted as. A person may only offer financial services if authorized to do so in terms of section 7(1) and section 8 of the FAIS Act.291 If the role player fails to comply with the conditions set out in the Act, he will not the agreement between the client and this role player as void.292 This makes sense, since the client will not always know whether the person complies with the Act or not. The agreement is enforceable, but against the provisions of the Act, in favor of the customer. 293.
In the case of K&L Brokers CC v Financial Sector Conduct Authority 2019 JOL 46215, the sole proprietor and key private limited company person applied for exemption from the requirements of the FAIS Act.303 They refused the request and the court held that the reasoning was justified. 304. It is clear from the above discussion that the purpose of the FAIS Act is to regulate services provided to the public in relation to financial products.
A comparative legal analysis of the different role players
- Introduction
- The insurance transaction
- Where the mandate ends and begins
- The final analysis
- Conclusion
The coverholder is not a normal broker or Lloyd's broker, for the following reasons: 1) the mandate of the normal broker lies with the insured, and 2) the mandate of the coverholder lies with Lloyd's broker.328 Lloyd's broker cannot, of course, own to conduct his business. A coverholder is an independent intermediary.329 However, there is uncertainty as to whether the coverholder is only within the scope of the independent intermediary or whether the coverholder could be other role players. However, there is uncertainty as to whether the policyholder could enter into contracts on behalf of the insurer.
The insurer (including Lloyd's underwriter and underwriting managers) is not similar to the coverholder, as the coverholder is mandated by the underwriter.330 The role and function of the underwriter is different from the underwriter as the underwriter accepts risks on behalf of the underwriter. of the insured, through the intermediary.331 As previously explained, the cover holder enters into policies on behalf of the insurer or intermediary.332. As previously explained, the independent broker includes the Lloyd's holder.338 The broker is governed by the Insurance Act and the FAIS Act, as there is a clear link between the two role players and the same provisions that apply in the above acts will apply to behind for cover holder. There is a further connection with a general insurance binder holder as both role players bind insurance policies on behalf of another role player.339 The provisions of section 48A of STIA apply to the cover holder as the agreement of the connector holder may connect to a non-mandated intermediary who is the cover holder.340.
A coverholder could also fall within the definition of an FSP, as an FSP provides intermediary-related services,341 and as noted above and in other chapters, a coverholder is an independent intermediary. This means that the cover holder is governed by the FAIS Act, with particular emphasis on the requirements of sections 7 and 8.342. However, it is not clear whether the cover holder would be excluded from this definition, as the cover holder does not sell products separately, but is more concerned with the administrative aspects of the policies.343 In the event that the supplier of the product is undoubtedly related to the cover holder, the same provisions apply, as defined in the FAIS Act.
Similarities and differences are captured, and the final analysis gives a clearer indication of where the coverholder stands within the South African insurance market. However, it is not stated that the coverholder is only connected to the independent intermediary, and due to uncertainty other role players are mentioned and compared.
Conclusion
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