The Financial Services Board (FSB) has fined Assupol Life Ltd (Assupol) R500, 000 this month after it was found that the insurer had contravened the Long-term Insurance Act. The fine was imposed after the Registrar of Long-term Insurance (the Registrar) referred a case against Assupol Life Limited (Assupol) to the Enforcement Committee of the FSB.
Assupol is a provider of funeral and life cover and also offers savings products as well as a retirement annuity. It was found that during the period August 2014 to June 2016 Assupol remunerated its independent intermediaries by way of permitting them to share in underwriting profits. But this contravened section 49 of the Long-term Insurance Act 52 of 1998 (the Act).
Further, during the period 20 June 2012 until 13 July 2015 Assupol contravened Rule 16.1 of the Policyholder Protection Rules (PPRs) issued under the Act by rejecting claims without advising policyholders in its notice of rejection of their rights as stipulated in Rule 16.1.
The FSB said that in particular, Assupol failed to inform its policyholders of: their right to lodge a complaint under the Financial Services Ombud Schemes Act and the time limitation for the institution of legal proceedings.
In addition it found that Assupol failed to exercise proper oversight over its outsourced functions and that its failure to comply with the PPRs had the potential of causing prejudice to the policyholders whose claims were rejected.
In mitigation the Registrar took into account, among other factors, that Assupol admitted the contravention, co-operated with the Registrar’s investigation and the subsequent enforcement action, and undertook to implement measures to prevent similar contraventions from recurring and to address the oversight problems.
Bridget Mokwena Halala said that Assupol places the highest priority on compliance with the various laws and regulations that apply to its business. “Assupol therefore regrets the sanctions that were imposed by the Regulator, and has adopted wide-ranging measures and additional controls to ensure that the contraventions were remedied and adjusted its business practices accordingly.
“The contraventions referred to by the FSB relates back to incidents of a couple of years ago and were furthermore restricted to a few of very specific aspects of the Assupol business (i.e. it did not relate to any company-wide practices). It is important to note that since the additional measures and controls (referred to above) were adopted, no further regulatory breaches have occurred.
“Assupol would like to note its appreciation for the constructive manner in which the FSB has engaged with Assupol to resolve the issues in the most amicable and urgent manner possible.
“Assupol has a strong, open and transparent relationship with the FSB and has, in this context and spirit, regularly engaged with the relevant FSB departments to resolve the issues referred to above.
“Assupol would furthermore like to point out that the urgency and seriousness in which it resolved the situation with the FSB was regarded by the FSB as very positive and constructive.”
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