Last week, the Financial Services Board (FSB) announced that its Enforcement Committee has levied a penalty of R100 000 against Discovery Insure for contravention of the Short-term Insurance Act.
Discovery was referred to the FSB by the Registrar of Short-term Insurance. The FSB explained that the referral was as a result of a premium waiver that Discovery Insure was offering. “From September 2014 to January 2015 Discovery offered a premium waiver for the month of January 2015 through its Vitalitydrive Program to members of the public using the Gautrain, if they took up its short-term insurance products before 31 October 2014.”
According to the Registrar, this premium waiver was an inducement to take up short-term insurance policies, which is a contravention of section 44 of the Short-term Insurance Act, 53 of 1998 (STIA).
In a statement, Anton Ossip, the CEO of Discovery Insure, noted: “A core part of our pricing philosophy is to reduce cross-subsidy where possible and [as] such we wanted to reward these clients for their reduced risk exposure through a once-off premium holiday. Less than 100 clients were awarded the premium holiday in January 2015.”
The FSB pointed out that when considering the case, the Registrar took into consideration “that the contravention was not intentional but was as a result of Discovery’s misinterpretation of the applicable legislation and that Discovery expressed regret for its actions, admitted the contravention and gave its full co-operation to the Registrar.”
Ossip highlighted that Discovery Insure had agreed to pay the fine of R100 000, stressing: “The decision does not impact our Vitalitydrive monthly Gautrain spend cash back benefit in any way. We have confirmation that the regulator is comfortable with this benefit.”
He added: “Discovery Insure takes matters of regulatory control seriously and we continue to be committed to working with the regulator is all aspects of our business.”