LONG-TERM INSURANCE ACT 52 OF 1998
(Last date modified: 24 March 2023)
ACT
To provide for a legal framework for the regulation of conduct of business supervision of long-term insurers in the Republic, that is consistent, to the extent practicable, with international standards for insurance regulation and supervision; for the control of certain activities of long-term insurers and intermediaries; and for matters connected therewith.
ARRANGEMENT OF SECTIONS
Introductory provisions
1. Definitions
1A. Relationship between Act and Financial Sector Regulation Act
PART I
ADMINISTRATION OF ACT
2. Exercise of powers and performance of duties by Authority
3. General provisions concerning Authority
4. Special provisions concerning Authority and his or her powers
5-6. …. [deleted]
PART II
REGISTRATION OF LONG-TERM INSURERS
7. …. [deleted]
8. Prohibition on performance of certain acts, by certain persons
9-14. …. [deleted]
PART III
BUSINESS AND ADMINISTRATION OF LONG-TERM INSURERS
15-28. …. [deleted]
PART IV
RETURNS TO AUTHORITY
29-35. …. [deleted]
PART V
COMPROMISE, ARRANGEMENT, AMALGAMATION, DEMUTUALISATION AND TRANSFER
37-40. …. [deleted]
PART VI
BUSINESS RESCUE AND WINDING-UP OF LONG-TERM INSURERS
41-43. …. [deleted]
PART VII
BUSINESS PRACTICE, POLICIES AND POLICYHOLDER PROTECTION
Business practice
44. Free choice in certain circumstances
45. Prohibition on inducements
46. Policy to be actuarially sound
47. Receipt for premium paid in cash, and validity of policy
47A. Collection of premiums by intermediaries
48. …. [deleted]
49. Limitation of remuneration
49A. Binder agreements
50. …. [deleted]
Policies
51. Policy suspended until payment of first premium
52-53. …. [deleted]
54. Limitation on provisions of certain policies
55. Limitation on policy benefits in event of death of unborn or of certain minors
56. …. [deleted]
57. Life policy in relation to person rendering or liable to render military service
58. Long-term policies entered into by certain minors
59-60. …. [deleted]
61. Prescription of certain debt
Policyholder protection
62. Protection of policyholders
63. Protection of policy benefits under certain long-term policies
64. Selection for realisation of protected policies
65. Partial realisation of protected policies
PART VIII
OFFENCES AND PENALTIES
66. Offences by persons other than long-term insurers
67. …. [deleted]
68. Penalty for failure to furnish Authority with returns etc
PART IX
TRANSITIONAL AND GENERAL PROVISIONS
Transitional provisions
69-70. …. [deleted]
General provisions
71. …. [deleted]
72. Regulations
73. Repeal and amendment of laws
74. Savings
75. Interpretation of certain references in existing laws
76. Short title and commencement
INTRODUCTORY PROVISIONS
1. Definitions
(1) In this Act, unless the context otherwise indicates-
“assistance policy” means a life policy in respect of which the aggregate of-
(a) the value of the policy benefits, other than an annuity, to be provided (not taking into account any bonuses to be determined in the discretion of the long-term insurer); and
(b) the amount of the premium in return for which an annuity is to be provided,
does not exceed R30 000, or another amount prescribed by the Minister; and includes a reinsurance policy in respect of such a policy;
“Authority” means the Financial Sector Conduct Authority established by the Financial Sector Regulation Act;
“conduct standard” has the same meaning ascribed to it in terms of section 1(1) of the Financial Sector Regulation Act;
“disability event” means the event of the functional ability of the mind or body of a person or an unborn becoming impaired;
“disability policy” means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits upon a disability event; and includes a reinsurance policy in respect of such a contract;
“Financial Sector Regulation Act” means the Financial Sector Regulation Act, 2017;
“fund” means-
(a) a friendly society as defined in section 1 of the Friendly Societies Act, 1956 (Act No. 25 of 1956);
(b) a pension fund organization as defined in section 1 of the Pension Funds Act, 1956 (Act No. 24 of 1956);
(c) a medical scheme as defined in section 1 of the Medical Schemes Act; and
(d) any other person, arrangement or business prescribed by the Authority;
“fund policy” means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits for the purpose of funding in whole or in part the liability of a fund to provide benefits to its members in terms of its rules, other than such a contract relating exclusively to a particular member of the fund or to the surviving spouse, children, dependants or nominees of a particular member of the fund; and includes a reinsurance policy in respect of such a contract;
“health event” means an event relating to the health of the mind or body of a person or an unborn;
“health policy” means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits upon a health event, and includes a reinsurance policy in respect of such a contract-
(a) excluding any contract-
(i) that provides for the conducting of the business of a medical scheme referred to in section 1(1) of the Medical Schemes Act; or
(ii) of which the policyholder is a medical scheme registered under the Medical Schemes Act, and which contract-
(aa) relates to a particular member of the scheme or to the beneficiaries of that member; and
(bb) is entered into by the medical scheme to fund in whole or in part its liability to the member or the beneficiaries of the member referred to in subparagraph (aa) in terms of its rules; but
(b) specifically including, notwithstanding paragraph (a)(i), any contracts identified by the Minister by regulation under section 72(2A) as a health policy;
“independent intermediary” has the meaning as prescribed in the regulations;
“Insurance Act” means the Insurance Act, 2017;
“joint standard” has the same meaning ascribed to it in terms of section 1(1) of the Financial Sector Regulation Act;
“licensed insurer” means-
(a) a previously registered insurer as defined in Item 1 of Schedule 3 to the Insurance Act who has been granted a licence under section 23 of the Insurance Act within the period referred to in item 6(2) of Schedule 3 to the Insurance Act; or
(b) a person who has been licensed under section 23 of the Insurance Act after the date on which that Act commenced;
“life event” means the event of the life of a person or an unborn-
(a) having begun;
(b) continuing;
(c) having continued for a period; or
(d) having ended;
“life insured” means the person or unborn to whose life, or to the functional ability or health of whose mind or body, a long-term policy relates;
“life policy” means a contract in terms of which a person, in return for a premium, undertakes to-
(a) provide policy benefits upon, and exclusively as a result of, a life event; or
(b) pay an annuity for a period;
and includes a reinsurance policy in respect of such a contract;
“long-term insurance business” means –
(a) in respect of a registered insurer, the business of providing or undertaking to provide policy benefits under long-term policies;
(b) in respect of a licensed insurer, life insurance business as defined in section 1 of the Insurance Act;
“long-term insurer” means a registered insurer or a licensed insurer;
“long-term policy” means-
(a) in respect of a registered insurer, an assistance policy, a disability policy, fund policy, health policy, life policy or sinking fund policy, or a contract comprising a combination of any of those policies; and includes a contract whereby any such contract is varied;
(b) in respect of a licensed insurer, a life insurance policy as defined in section 1 of the Insurance Act;
“Medical Schemes Act” means the Medical Schemes Act, 1998 (Act No. 131 of 1998);
“Minister” means the Cabinet member responsible for finance;
“official website” means a website of the Authority;
“policy benefits” means-
(a) in respect of a registered insurer, one or more sums of money, services or other benefits, including an annuity;
(b) in respect of a licensed insurer, benefits to which a person is contractually entitled under a life insurance policy arising from an insurer’s insurance obligations;
“policyholder” in respect of a-
(a) registered insurer, means the person entitled to be provided with the policy benefits under a long-term policy;
(b) licensed insurer, has the meaning assigned to it in the Insurance Act;
“premium” in respect of a-
(a) registered insurer, means the consideration given or to be given in return for an undertaking to provide policy benefits;
(b) licensed insurer has the meaning assigned to it in the Insurance Act;
“Register” means the Financial Sector Information Register referred to in section 256 of the Financial Sector Regulation Act;
“registered insurer” means a previously registered insurer as defined in item 1 of Schedule 3 to the Insurance Act for the period between the date on which the Insurance Act commenced and the previously registered insurer’s licence application referred to in item 6(2) of Schedule 3 to the Insurance Act has been granted or not granted;
“regulation” means a regulation under section 72;
“reinsurance policy” means-
(a) in respect of a registered insurer, a reinsurance policy in respect of a long-term policy;
(b) in respect of a licensed insurer, a life insurance policy written under the reinsurance class of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act;
“repealed Act” means the Insurance Act, 1943 (Act No. 27 of 1943);
“representative” has the meaning as prescribed in the regulations;
“services as intermediary” has the meaning as prescribed in the regulations;
“sinking fund policy” means a contract, other than a life policy, in terms of which a person, in return for a premium, undertakes to provide one or more sums of money, on a fixed or determinable future date, as policy benefits; and includes a reinsurance policy in respect of such a contract;
“short-term insurer” has the meaning assigned to it in the Short-term Insurance Act, 1998;
“this Act” includes any regulation made, or matter prescribed under this Act;
“Tribunal” means the Financial Services Tribunal established in terms of section 219 of the Financial Sector Regulation Act;
“unborn” means a human foetus conceived but not born.
(2) For the purposes of entering into a long-term policy the life of an unborn shall be deemed to begin at conception.
(3) Unless the context otherwise indicates, words and expressions not defined in subsection (1) have the same meaning ascribed to them in terms of the Financial Sector Regulation Act or Insurance Act.
(4) A reference to statutory actuary in this Act must be construed as a reference to the head of the actuarial control function appointed by a long-term insurer in accordance with the Insurance Act.
1A. Relationship between Act and Financial Sector Regulation Act
(1) ……….
(2) Except as otherwise provided for in this Act or the Financial Sector Regulation Act, the powers and duties of the Authority in terms of this Act are in addition to the powers and duties that it has in terms of the Financial Sector Regulation Act.
(3) A reference in this Act to the Authority determining or publishing a matter by notice in the Gazette must be read as including a reference to the Authority determining or publishing the matter by notice published in the Register.
(4) Unless expressly provided otherwise in this Act, or this Act requires a matter to be prescribed by regulation, a reference in this Act to a matter being-
(a) prescribed must be read as a reference to the matter being prescribed in a conduct standard or a joint standard; or
(b) determined must be read as a reference to the Authority determining the matter in writing and registering the determination in the Register.
(5)
(a) A reference in this Act to an on-site visit in terms of a provision of this Act must be read as a reference to a supervisory on-site inspection in terms of the Financial Sector Regulation Act.
(b) A reference to an inspection in terms of a provision of this Act must be read as a reference to an investigation in terms of the Financial Sector Regulation Act.(6) The references in section 3(3) to an appeal to the board of appeal established by section 26 of the Financial Services Board Act must be read as a reference to a reconsideration of the decision by the Tribunal in terms of the Financial Sector Regulation Act.
(7) A reference in this Act to a determined or prescribed fee must be read as a reference to the relevant fee determined in terms of section 237 and Chapter 16 of the Financial Sector Regulation Act.
1B. Regulatory instruments
For the purposes of the definition of ‘‘regulatory instrument’’ in section 1(1) of the Financial Sector Regulation Act, any matter prescribed by the Authority in respect of which notice in the Gazette is specifically required by this Act is a regulatory instrument.
PART IADMINISTRATION OF ACT
2. Exercise of powers and performance of duties by Authority
(1) The Authority, in fulfilling its responsibility for implementing this Act, must exercise its powers and perform its duties in terms of this Act subject to the Financial Sector Regulation Act.
(2) ……….(3) ……….
3. General provisions concerning Authority
(1) An approval of, or a determination or decision by, or a notice to be given by or to, the Authority, shall, without derogating from legal rules on the making known or the publication thereof, be valid only if it is in writing.
(2) Whenever the approval of, or a determination or decision by, or the performance of any other act by the Authority, is sought by a person under this Act or any other law, application therefor shall be made in writing to the Authority and the application shall –
(a) be made in the form the Authority requires; and
(b) be accompanied by –
(i) the fees determined under the Financial Sector Regulation Act; and
(ii) the information or documents which the Authority requires.
(3) If a person with an interest in the matter is aggrieved by a determination made, decision taken or act performed in the exercise or carrying out of the powers or duties of the Authority, that person may appeal to the board of appeal established by section 26 of the Financial Services Board Act, with the necessary changes, in accordance with that section.
(4) A person may, upon payment of any fees determined under the Financial Sector Regulation Act, inspect only those documents determined by the Authority by notice on the official website, which are held by the Authority under this Act in relation to a long-term insurer or an intermediary, or obtain a copy of or extract from any such document.
(5) A document which purports to have been certified by the Authority as a document held in the Authority’s office or to be a copy of such a document, shall be prima facie proof of the content of such a document or copy, and shall be admissible in evidence in any proceedings.
4. Special provisions concerning Authority and his or her powers
(1) When anything is required or permitted to be done under this Act within a particular period, the Authority may, before the expiry of that period, extend it.
(2) ……….(3) ……….(4) ……….(5) ……….(6) ……….(7) ……….(8) ……….
5. ……….
6. ……….
PART II
REGISTRATION OF LONG-TERM INSURERS
7. ……….
8. Prohibition on performance of certain acts, by certain persons
(1) ……….
(2) ……….
(3) Subject to this Act, no person shall render services as intermediary, in relation to a long-term policy, unless-
(a) long-term insurers are the only underwriters in terms of the long-term policy concerned; or
(b) that person does so with the approval of the Authority.
(4) The Authority may from time to time by notice on the official website or, in the case of any particular person, by notice to such person, subject to such conditions as the Authority determines-
(a) and specifies in the notice, grant to persons generally or to any particular person or category of persons the approval contemplated in subsection (3)(b) to such extent as may be specified by the Authority in the notice; and
(b) at any time withdraw or amend any such approval to such extent as may be determined by the Authority.
(5) Subsection (3) shall not apply in the case of a long-term reinsurance policy unless and to the extent that the Authority so determines by notice in the Gazette.
9. ……….
10. ……….
11. ……….
12. ……….
13. ……….
14. ……….
PART III
BUSINESS AND ADMINISTRATION OF LONG-TERM INSURERS
15. ……….
15A. ……….
16. ……….
17. ……….
18. ……….
19. ……….
20. ……….
21. ……….
22. ……….
23. ……….
24. ……….
25. ……….
26. ……….
27. ……….
28. ……….
PART IV
RETURNS TO AUTHORITY
29. ……….
30. ……….
31. ……….
32. ……….
33. ……….
34. ……….
35. ……….
36. Returns to Authority
(1) A long-term insurer shall furnish the Authority with returns relating to its business –
(a) in the medium and form;
(b) containing the information; and
(c) by the date or within the period,
determined by the Authority by notice on the official website, either generally or in relation to a particular insurer.
(2) If the Authority is satisfied that a return furnished to it in terms of subsection (1) is incomplete or incorrect, it may, by notice-
(a) direct the long-term insurer to furnish the Authority, within a specified period, with specified information or documents which the Authority considers necessary to complete or correct the return; or
(b) reject the return and require the long-term insurer to furnish the Authority, within a specified period, with a new return which is complete and correct.
(3) If the Authority is satisfied that a statement forming part of the returns furnished by the long-term insurer in terms of subsection (1) or (2) requires further investigation, the Authority may by notice direct the long-term insurer to furnish him or her by a specific dale or within a specific period with a report-
(a) in the medium and form; and
(b) containing the required information,
compiled by a person nominated by the Authority at the cost of the long-term insurer.
PART V
COMPROMISE, ARRANGEMENT, AMALGAMATION, DEMUTUALISATION AND TRANSFER
37. ……….
38. ……….
39. ……….
40. ……….
PART VI
BUSINESS RESCUE AND WINDING-UP OF LONG-TERM INSURERS
41. ……….
42. ……….
43. ……….
PART VII
BUSINESS PRACTICE, POLICIES AND POLICYHOLDER PROTECTION
Business practice
44. Free choice in certain circumstances
(1) If a party to a contract in terms of which money is loaned, goods are leased or credit is granted, requires, whether as a condition thereof or otherwise, that a long-term policy or its policy benefits be made available and used for the purpose of protecting the interests of a creditor, the person who is so required to make that policy or those policy benefits available shall be entitled, and shall be given prior written notification of that entitlement, to a free choice –
(a) as to whether he or she wishes to enter into a new policy and make it available for that purpose, or wishes to make available an existing policy of the appropriate value for that purpose, or wishes to utilise a combination of those options; and
(b) if a new policy is to be entered into –
(i) as to the long-term insurer with which the policy is entered into and as to the intermediary (if any) who is to render services contemplated in section 49 in connection with the transaction;
(ii) as to whether or not the policy benefits concerned are to be provided in an event other than the death or disability of the life insured; and
(iii) as to whether or not the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, shall exceed the value of that debt or other obligation; and
(c) if an existing policy is to be made available –
(i) as to the intermediary (if any) who is to render services contemplated in section 49 in connection with the transaction; and
(ii) as to whether or not a variation of the policy required for that purpose shall be such as to cause –
(aa) policy benefits to be provided in an event other than the death or disability of the life insured; or
(bb) the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, to exceed the value of that debt or other obligation.
(2) The provisions of subsection (1) shall be deemed not to have been complied with unless the policyholder whose policy is to be made available has confirmed in writing, before the policy is used for the purpose of securing the debt concerned or other obligation, that he or she –
(a) was given prior written notification of his or her entitlement to the freedom of choice referred to in that subsection;
(b) exercised that freedom of choice; and
(c) was not subject to any coercion or inducement as to the manner in which he or she exercised that freedom of choice.
(3) If the provisions of subsection (1) are not complied with, the security provided by the policy made available and used for the purpose shall be void and the policy benefits shall be provided to the person who made it available.
(4) Subsection (1) shall not apply to a long-term insurer if it lends money to one of its policyholders upon the security of a long-term policy issued by itself.
(5) This section does not apply if the long-term policy or its policy benefits as contemplated in subsection (1), is made available for the purpose of protecting the interests of a creditor under a credit agreement to which the National Credit Act, 2005, applies.
45. Prohibition on inducements
(1) Unless done in accordance with the rules prescribed under section 62, no person shall provide, or offer to provide, directly or indirectly, any valuable consideration as an inducement to a person to enter into, continue, vary or cancel a long-term policy.
(2) Subsection (1) shall not apply in the case of a long-term reinsurance policy unless and to the extent that the Authority so determines by notice in the Gazette.
46. Policy to be actuarially sound
(1) A long-term insurer shall not-
(a) enter into any particular kind of long-term policy unless the statutory actuary is satisfied that the premiums, benefits and other values thereof are actuarially sound;
(b) make a distinction between the premiums, benefits or other values of different long-term policies unless the statutory actuary is satisfied that the distinction is actuarially justified; or
(c) award a bonus or similar benefit to a policyholder unless-
(i) it is done in accordance with the principles and practices of financial management of the long-term insurer; and
(ii) the statutory actuary is satisfied that it is actuarially sound and that a surplus is available for that purpose.
(2) For the purposes of subsection (1)(c)(i) ‘principles and practices of financial management’ means a statement approved by the board of directors of the long-term insurer setting out the discretion retained by the board of directors and the parameters within which that discretion must be exercised in respect of long-term policies where the long-term insurer has to exercise its discretion in awarding a bonus or similar benefit.
47. Receipt for premium paid in cash, and validity of policy
(1) When a premium is paid in bank notes or coins, the recipient thereof shall give to the payer a written receipt for it.
(2)
(a) The receipt shall state the name, address and telephone number of the recipient, the policy number and the name of the long-term insurer on whose behalf the premium is received.
(b) Paragraph (a) does not apply to a receipt issued by a bank as defined in section 1 of the Banks Act, 1990 (Act No. 94 of 1990), or by a mutual bank as defined in section 1 of the Mutual Banks Act, 1993 (Act No. 124 of 1993).
(3) For the purposes of the validity of a long-term policy the payment of a premium under the long-term policy to a person on behalf of the long-term insurer shall be deemed to be payment to the long-term insurer under that long-term policy.
47A. Collection of premiums by intermediaries
(1) No independent intermediary shall receive, hold or in any other manner deal with premiums payable under a long-term policy entered into or to be entered into with a long-term insurer and no such long-term insurer shall permit such independent intermediary to so receive, hold or in any other manner deal with such premiums-
(a) unless authorised to do so by the long-term insurer concerned as prescribed by regulation; and
(b) otherwise than in accordance with the regulations.
(2) Subsection (1) shall not apply in the case of a long-term reinsurance policy unless and to the extent that the Authority so determines by notice in the Gazette.
48. ……….
49. Limitation of remuneration
No consideration shall be-
(a) offered or provided by a long-term insurer or a person on behalf of a long-term insurer to an independent intermediary or any other person; or
(b) accepted by an independent intermediary or other person,
for rendering services referred to in the regulations, other than commission or remuneration contemplated in the regulations and otherwise than in accordance with the regulations.
49A. Binder agreements
(1) A long-term insurer may in terms of a written agreement only, and in accordance with any requirements, limitations or prohibitions that may be prescribed by regulation, allow another person to do any one or more of the following on behalf of that insurer:
(a) Enter into, vary or renew a long-term policy on behalf of that insurer;
(b) determine the wording of a long-term policy;
(c) determine premiums under a long-term policy;
(d) determine the value of policy benefits under a long-term policy;
(e) settle claims under a long-term policy.
(1A) Subsection (1) shall not apply in the case of a long-term reinsurance policy unless and to the extent that the Authority so determines by notice in the Gazette.
(2) A written agreement referred to in subsection (1) must-
(a) set out which of the activities referred to in subsection (1) that other person may perform and the particular kinds of long-term policies in respect of which those activities may be performed;
(b) set out the particular kinds of long-term policies which may be entered into, varied or renewed by that other person;
(c) slate if that other person is authorised to determine the wording of the policies referred to in paragraph (a), and if authorised, the extent to which and the circumstances under which the wording may be determined;
(d) state if that other person is authorised to determine premiums in respect of the policies referred to in paragraph (a), and if authorised, the gross premiums or the basis for the calculation of gross premiums that may be determined, and the extent to which and the circumstances under which the premiums may be determined;
(e) state if that other person is authorised to determine the value of policy benefits, and if authorised, the maximum value of the policy benefits that may be determined under each kind of long-term policy referred to in paragraph (a), and the extent to which and the circumstances under which the benefits may be determined;
(f) state if that other person is authorised to settle claims under the policies referred to in paragraph (a), and if authorised, the extent to which and the circumstances under which the claims may be settled;
(g) state the basis on which that other person will be remunerated for services rendered in terms of paragraphs (b) to (f), which basis must be consistent with any requirements, limitations or prohibitions as may be prescribed by regulation;
(h) oblige that other person to-
(i) disclose to policyholders of policies referred to in paragraph (a)-
(aa) the name of the relevant long-term insurer, and the fact that that other person is acting in terms of an agreement contemplated in this section; and
(bb) any remuneration payable to that other person in terms of an agreement contemplated in this section;
(ii) include the name of the long-term insurer underwriting the long-term policy in any advertisement, brochure or similar communication which relates to the long-term policy referred to in paragraph (a);
(iii) keep and maintain proper books of account and other records in respect of the policies referred to in paragraph (a) and allow the long-term insurer, its statutory actuary and its auditors full and unfettered access to those books of account and records; and
(iv) make available to the long-term insurer, its statutory actuary and its auditors the policies referred to in paragraph (a) and any information relating thereto, including the names, identity numbers and contact details of policyholders, insured persons and beneficiaries, upon request;
(i) prohibit that other person to delegate, assign or subcontract any of the functions referred to in paragraphs (b) to (f) to another person; and
(j) state the circumstances under which the agreement will lapse or may be terminated, and the necessary steps that must be taken to ensure the effective and efficient termination of the agreement taking into account the interests of policyholders.
(3) A written agreement referred to in subsection (1), subject to any requirements, limitations or prohibitions as may be prescribed by regulation-
(a) may not authorise that other person to add an amount to any gross premium referred to in subsection (2)(d);
(b) may not authorise that other person to deduct any amount from any claims referred to in subsection (2)(f); or
(c) may provide or prohibit that person to directly or indirectly participate in the profits attributable to the policies referred to in subsection 2(a).
(4) A person that entered into an agreement contemplated in subsection (1) with a long-term insurer may-
(a) render the services contemplated in subsection (1)(a) to (e) in respect of any kind of long-term policy issued by that long-term insurer identified in the agreement only in accordance with any requirements, limitations or prohibitions as may be prescribed by regulation; and
(b) not render any of the services contemplated in subsection (1)(a) to (e) in respect of any kind of long-term policy issued by that long-term insurer not identified in the agreement.
(5) Despite any term to the contrary contained in an agreement contemplated in subsection (1) the long-term insurer that entered into the agreement remains-
(a) responsible for compliance with this Act;
(b) liable for any claims relating to policies included in the agreement, including any claims that may arise because of the failure of that other person to comply with the agreement; and
(c) the owner of any information and documentation relating to the policies contemplated in the agreement, which must, upon termination of the agreement, be returned to the long-term insurer.
(6) Any party to a written agreement referred to in subsection (1) must make a copy of that agreement available to the Authority on request.
50. ……….
Policies
51. Policy suspended until payment of first premium
(1) The undertaking of a long-term insurer to provide policy benefits under a long-term policy, shall be suspended until the long-term insurer has received, if there-
(a) is to be one premium, that premium; or
(b) are to be two or more premiums, the first of those premiums,
or until arrangements to its satisfaction have been made for the provision of the premium by debit order, stop order, credit card or other instrument approved by the Authority generally by notice on the official website.
(2) Subsection (1) shall not apply to-
(a) a fund policy in the case of a registered insurer; and
(b) a life insurance policy written under the fund risk class of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act in the case of a licensed insurer.
(3) Subsection (1) shall not apply in the case of a long-term reinsurance policy unless and to the extent that the Authority so determines by notice in the Gazette.
52. ……….
53. ……….
54. Limitation on provisions of certain policies
(1) A long-term insurer may not-
(a) undertake to provide policy benefits, or provide policy benefits, under;
(b) provide consideration upon the surrender of; or
(c) make a loan upon the security of,
a long-term policy contemplated in the regulations, otherwise than in accordance with the requirements and limitations set out in the regulations.
(2) The requirements and limitations set out in regulations made under subsection (1) apply from the inception of a policy, if the regulation so provide, irrespective of the fact that the policy was entered into before or after the commencement of this Act or the regulations.
55. Limitation on policy benefits in event of death of unborn or of certain minors
(1) A long-term insurer shall not undertake to provide, or provide, policy benefits in terms of a long-term policy in the event of the death of an unborn, or of a minor before that minor attains the age of 14 years, the value of which, on its own or when added to the value of policy benefits or similar benefits which to its knowledge are to be provided in that event by a long-term insurer or a short-term insurer or a friendly society in terms of any policy, exceeds, in the event of the death-
(a) of that unborn, or of that minor before he or she attains the age of six years, R20 000; or
(b) of that minor after he or she attains the age of six years but before he or she attains the age of 14 years, R50 000,
or such other amount prescribed by the Minister: Provided that this section shall not apply to or prohibit the allocation of profit in respect of such policies on the lives of minors, which allocation does not exceed the profits allocated to other such policies on the lives of persons who are not minors.
(2) Subsection (1) shall not apply in relation to a policy in terms of which, in the event of the death of the unborn, or of the minor before he or she attains the age of 14 years, the value of the policy benefits does not exceed an amount equal to the aggregate of all the premiums paid in terms of that policy, plus interest on each premium at a rate prescribed by the Minister, compounded annually.
56. ……….
57. Life policy in relation to person rendering or liable to render military service
(1) A long-term insurer shall not refuse to enter into a life policy on the grounds that the life insured is a person rendering or liable to render military service in accordance with the Defence Act, 1957 (Act No. 44 of 1957).
(2) Notwithstanding anything to the contrary in a life policy contained, the policy benefits to be provided thereunder in the event of the death of the life insured in the course of or as a result of the rendering of military service in accordance with the Defence Act, 1957, shall not be less than an amount equal to the value for which the policy could be surrendered on the day of the death of the life insured, had the regulations not been made.
58. Long-term policies entered into by certain minors
A minor who has attained the age of 18 years may, without the consent of his or her guardian as if he or she has attained majority, enter into or vary, or deal with a long-term policy under which he or she is the life insured and pay the premium due under the policy with money which he or she has earned or which is at his or her disposal, and a policy benefit under the policy shall be provided to the minor who may deal with it as he or she thinks fit without the consent of his or her guardian, as if he or she has attained majority.
59. ……….
60. ……….
61. Prescription of certain debt
Debt consisting of interest on an unpaid premium, or on a loan granted by a long-term insurer on sole security of a long-term policy, or on an advance granted by a long-term insurer in respect of an amount which is to be payable under a long-term policy, shall, in the case of a long-term policy entered into after 31 December 1973, not prescribe before the liability of the long-term insurer under the long-term policy prescribes.
Policyholder Protection
62. Protection of policyholders
(1) The Authority, by notice in the Gazette, may-
(a) prescribe rules not inconsistent with this Act, aimed at ensuring for the purpose of policyholder protection that policies are entered into, executed and enforced in accordance with sound insurance principles and practice in the interests of the parties and in the public interest generally;
(b) vary or rescind any such rule; and
(c) determine the period which must elapse before a rule, variation or rescission takes effect after it has been published in the Gazette.
(2) Without derogating from the generality of subsection (1)(a), rules may provide-
(a) that provisions with a particular import may not appear in a policy and that they shall be void if they do so appear;
(b) that the policy and particular information in relation to a policy shall be made known in a particular manner to prospective policyholder or policyholder, and what the legal consequences shall be if that is not done;
(c) that a policyholder may cancel a policy under particular circumstances and within a determined period, and what the legal consequences shall be if he or she does so;
(d) for norms and standards with which policies, long-term insurers or types of long-term insurance business must comply;
(e) for standardised wording, definitions or provisions that must be or may not be included in policies;
(f) for principles and requirements relating to any advertisement, brochure or similar communication which relates to the business of a long-term insurer, or to a long-term policy;
(g) for principles and requirements relating to claims handling, complaints handling and dispute resolution applicable to long-term insurers;
(h) for principles and requirements relating to the manner and form in which policy benefits must be provided;
(i) for principles and requirements relating to misrepresentation in relation to a long-term policy;
(j) for requirements relating to the validity of a contract under a long-term policy;
(k) for principles and requirements relating to non-payment of premiums and grace periods in relation to a long-term policy, and related disclosures to policyholders;
(l) for principles and requirements relating to insurance product design and ongoing review of insurance product performance to ensure the fair treatment of policyholders;
(m) for principles and requirements relating to a long-term insurer’s dealings with intermediaries;
(n) for principles and requirements relating to data management in order to appropriately identify, assess, measure and manage the conduct of business risks associated with its insurance business to ensure the fair treatment of policyholders; and
(o) for principles and requirements relating to the termination of policies.
(3) Rules referred to in subsection (2) may-
(a) apply generally;
(b) be limited in application to a particular kind or type of policies, long-term insurers or long-term insurance business; or
(c) differentiate between different kinds of insurers, policies, contracts, and services.
(4) ……….
(5) Any rule promulgated by the Minister prior to the commencement of the Financial Services Laws General Amendment Act, 2013, must be regarded as having been prescribed under this section, and remains valid and enforceable until repealed or amended by the Authority.
63. Protection of policy benefits under certain long-term policies
(1) Subject to subsections (2), (3) and (4), the policy benefits provided or to be provided to a person under one or more-
(a) in respect of a registered insurer, assistance, life, disability or health policies; or
(b) in the case of a licensed insurer, policies written under the risk, fund risk, credit life, funeral, life annuities, individual investment or income drawdown class of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act,
in which that person or the spouse of that person is the life insured and which has or have been in force for at least three years (or the assets acquired exclusively with those policy benefits) shall, other than for a debt secured by the policy-
(i) during his or her lifetime, not be liable to be attached or subjected to execution under a judgment of a court or form part of his or her insolvent estate; or
(ii) upon his or her death, if he or she is survived by a spouse, child, stepchild or parent, not be available for the purpose of the payment of his or her debts.
(2) The protection contemplated in subsection (1) shall apply to policy benefits and assets acquired solely with the policy benefits, for a period of five years from the date on which the policy benefits were provided.
(3) Policy benefits are only protected as provided in –
(a) subsection (1)(b), if they devolve upon the spouse, child, stepchild or parent of the person referred to in subsection (1) in the event of that person’s death; and
(b) subsection (1)(a) and (b), if the person claiming such protection is able to prove on a balance of probabilities that the protection is afforded to him or her under this section.
(4) Policy benefits are protected as provided for in subsection (1) (a) and (b), unless it can be shown that the policy in question was taken out with the intention to defraud creditors.
64. Selection for realisation of protected policies
If –
(a) two or more long-term policies referred to in section 63, held by the same policyholder, are attached in execution of a judgment or order of any court at the instance of a creditor; or
(b) the policyholder of two or more long-term policies referred to in section 63 is found to be or otherwise declared insolvent by a Court,
and only a part of the aggregate realisable value of the policies is protected as contemplated in that section, the judgment creditor or the trustee of the insolvent estate, as the case may be, shall determine which policy or policies shall be realised, wholly or partially, in order to make available to him or her so much of the aggregate realisable value as is not so protected and to which he or she is entitled.
65. Partial realisation of protected policies
(1) A judgment creditor or the trustee of the insolvent estate of a policyholder, who is entitled to a part of the realisable value of a long-term policy may, if he or she is in possession of the policy, deliver it to the insurer who is liable under the policy for the purpose of the payment to that creditor or trustee of the sum to which he or she is entitled.
(2) If a judgment creditor or trustee referred to in subsection (1) is not in possession of the policy concerned, the person in possession thereof shall, at the request of the judgment creditor or trustee, deliver it to the insurer which is liable under the policy for the purpose of the payment to that creditor or trustee of the sum to which he or she is entitled.
(3) On receipt of a long-term policy delivered to it in terms of subsection (1) or (2), the long-term insurer shall –
(a) at the request of the judgment creditor or trustee concerned, pay to him or her a sum equal to that part of the realisable value of the policy to which he or she is entitled; and
(b) deal with the remaining part of the realisable value of the policy in accordance with section 52(2).
PART VIII
OFFENCES AND PENALTIES
66. Offences by persons other than long-term insurers
(1) A person, other than a long-term insurer, who-
(a) contravenes or fails to comply with a provision of section 44(1), 45, 47 or 49; or
(b) furnishes false information in relation to an application for approval under a provision of this Act,
shall be guilty of an offence and liable on conviction to a fine not exceeding R5 million or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment.
(2) A person, other than a long-term insurer, who contravenes or fails to comply with a provision of section 8(3) shall be guilty of an offence and liable on conviction to a fine not exceeding R10 million or to imprisonment for a period not exceeding 10 years, or to both such fine and such imprisonment.
67. ……….
68. Penalty for failure to furnish the Authority with returns etc.
(1)
(a) A person who fails to furnish the Authority with a return, information or document, as provided by this Act, within the specified period or the period determined by the Authority by notice on the official website, or any extension thereof, shall, irrespective of any criminal proceedings instituted against the person under this Act, be liable to a penalty not exceeding R5 000 for every day during which the failure continues, unless the Authority, on good cause shown, waives the penalty or any part thereof.
(b) The amount referred to in paragraph (a) must be adjusted by the Authority annually in order to reflect the Consumer Price Index, as published by Statistics South Africa.
(2) A penalty contemplated in subsection (1) shall be imposed by notice by the Authority on the person concerned, and such imposition shall be preceded by the procedures determined by the Authority by notice on the official website to afford such person a reasonable opportunity to be heard, and shall take effect on a date specified in such notice of the Authority which may be a date prior to the date of the notice.
(3) A penalty so imposed shall constitute a debt due to the Authority and shall be recoverable by action by the Authority in any court having jurisdiction.
68. ……….
PART IX
TRANSITIONAL AND GENERAL PROVISIONS
Transitional provisions
69. ……….
70. ……….
General provisions
71. ……….
Accounting Practice
72. Regulations
(1) The Minister may make regulations not inconsistent with this Act –
(a) prescribing all matters which are required or permitted by this Act to be prescribed by regulation;
(b) prescribing services performed by an independent intermediary or any other person on behalf of an insurer that will be subject to the regulations and setting out requirements that apply to such services;
(bA) prohibiting or limiting classes of persons from performing any service prescribed in accordance with paragraph (b);
(bB) prescribing governance, risk management, internal controls, oversight and operational ability requirements in relation to a service prescribed in accordance with paragraph (b);
(bC) prescribing requirements relating to notification to or approval by the Authority before entering into or terminating an arrangement in respect of any service prescribed in accordance with paragraph (b);
(bD) prescribing requirements, limitations or prohibitions in respect of any agreement relating to any service prescribed in accordance with paragraph (b);
(c) prescribing different or additional requirements for the receipt or retention of, or dealing with money in respect of premiums;
(d)
(i) prohibiting or limiting the consideration which may be offered or provided; and
(ii) prescribing the timing, manner and conditions under which consideration may be offered or provided,
by or on behalf of a long-term insurer to an independent intermediary or any other person, for rendering services prescribed in accordance with paragraph (b), or to any other person associated in business with or related within the second degree of consanguinity or affinity to the independent intermediary or other person who has rendered or is to render such services;
(e)
(i) prohibiting consideration that may be accepted; and
(ii) prescribing the timing, manner and conditions under which consideration may be accepted,
by an independent intermediary or other person for rendering services prescribed in accordance with paragraph (b), or by any other person associated in business with or related within the second degree of consanguinity or affinity to the independent intermediary or other person who has rendered or is to render such services;
(f) prescribing different classes of persons to whom consideration contemplated in paragraphs (d) and (e) may be offered or provided, for such services rendered or to be rendered;
(g) prescribing periods within which policies and amended policies are to be issued;
(gA) prescribing in respect of section 49A, requirements, limitations or prohibitions relating to-
(i) the agreements contemplated in section 49A(1);
(ii) any additions to gross premiums or deductions from claims in respect of policies referred to in the agreements contemplated in section 49A(1);
(iii) any consideration that may be offered or provided from, by or on behalf of a long-term insurer to a person that enters into an agreement contemplated in section 49A(1) with a long-term insurer;
(iv) any participation or sharing in the profits attributable to the policies referred to in the agreements contemplated in section 49A(1); and
(v) the circumstances under which a person who has entered into an agreement contemplated in section 49A(1) may render services in respect of a policy not referred to that person by the relevant insurer or an independent intermediary; and
(vi) governance, risk management, internal controls, oversight and operational ability;
(h) prescribing that every long-term insurer shall within a specified period as from the close of each financial year of its long-term insurance business furnish the Authority with a statement of all changes which occurred during the said year in specified matters in relation to the insurer concerned.
(2) Regulations made under this section may-
(a) differentiate between different kinds of insurers, policies, agreements or contracts, which may, for the purposes of this section, be defined either in relation to categories, types or kinds of insurers or policies or in any other manner;
(b) be limited in its application to a particular kind of insurer, policy, agreement or contract, which may, for the purposes of this section, be defined either in relation to categories, types or kinds of insurers or policies or in any other manner; and
(bA) empower the Authority to prescribe matters specified in the Regulations; and
(c) prescribe a fine or a period of imprisonment not exceeding one year for a contravention of or a failure to comply with a provision of the regulations.
(2A) ……….
(2B) Before regulations in terms of this Act are promulgated, the Minister must publish the draft regulations in the Gazette for public comment and submit the regulations to Parliament, while it is in session, for parliamentary scrutiny at least one month before their promulgation.
(3) The Minister shall publish any regulations made under this section in the Gazette.
73. Repeal and amendment of laws
Subject to section 74, the laws specified in Schedule 4 are hereby repealed or amended to the extent set out in the third column of that Schedule.
74. Savings
(1) Notwithstanding the partial repeal of the repealed Act by section 73, the provisions of –
(a) section 25, read with section 19A of that Act, shall continue to apply in relation to a long-term insurer that has before the commencement of this Act notified the Authority, as defined in the repealed Act, that it intends to apply to the Court for the confirmation of a conversion contemplated in the said section 25, and if such application is made to the Court before 31 December 1999, that application may, if the long-term insurer so elects, be made, continued with and dealt with in accordance with the said provisions as if they had not been repealed by section 73;
(b) section 38, read with sections 38B, 52, 58 and 59 of that Act, shall continue to apply in relation to a policy contemplated in those sections and entered into during the period 1 April 1944 to 20 June 1978;
(c) section 38A, read with sections 38B, 52, 58, 59 and 59A of that Act, shall continue to apply in relation to any policy contemplated in those sections and entered into during the period 21 June 1978 to the date immediately before the commencement of this Act;
(d) section 62 of that Act shall continue to apply in relation to any industrial and funeral policy contemplated in that section;
(e) the Second Schedule to that Act shall continue to apply to industrial and funeral policies.
(2) Anything done before the commencement of this Act under, in terms of or by virtue of a provision of the repealed Act by or in relation to persons registered in terms of that Act to carry on long-term insurance business as defined in that Act shall, in so far as it was done lawfully and unless it is clearly inappropriate, be deemed to have been done under, in terms of or by virtue of the corresponding provision of this Act.
75. Interpretation of certain references in existing laws
Unless it would in a particular case be clearly inappropriate, a reference in a law in force immediately before the commencement of this Act –
(a) to a domestic insurer or a registered insurer, shall be construed as a reference to a long-term insurer or a short-term insurer, as the case may be;
(b) to a home service policy, a funeral policy or an industrial policy, shall be construed as a reference to an assistance policy;
(c) to home service business, funeral business or industrial business, shall be construed as a reference to the business of providing policy benefits under assistance policies;
(d) to insurance business as defined in the repealed Act, shall, in relation to a long-term insurer, be construed as a reference to long-term insurance business;
(e) to a life policy, shall be construed as a reference to a life policy, a disability policy, a fund policy or a health policy, as the case may be;
(f) to life business, shall be construed as a reference to the business of providing policy benefits under long-term policies other than assistance policies or sinking fund policies;
(g) to a personal accident policy, shall, in relation to a long-term insurer, be construed as a reference to a disability or health policy;
(h) to personal accident business, shall, in relation to a long-term insurer, be construed as a reference to the business of providing policy benefits under disability or health policies;
(i) to a valuator, as defined in the repealed Act, shall be construed as a reference to a statutory actuary.
76. Short title and commencement
This Act shall be called the Long-term Insurance Act, 1998, and shall come into operation on a date fixed by the President by proclamation in the Gazette.
