Long Term Insurance Act, 1998 (Act No. 52 of 1998)

Regulations

Regulations under the Long-term Insurance Act, 1998

Part 3 : Remuneration

Part 3C : Limitation on Remuneration for Binder Functions

3.21 Remuneration that may be offered or provided to a binder holder
Purchase cart Previous page Return to chapter overview Next page

 

(1)An insurer may pay a binder holder a fee for services rendered under a binder agreement, if the fee is consistent with the principles referred to in regulation 3.20(1).

 

(2)Despite subregulation (1), an insurer must not without the prior approval of the Authority referred to in subregulation (3) pay a binder holder a fee for services rendered under a binder agreement that exceeds the value listed in the Table below, reflected as a percentage of the aggregate of the total premiums payable by policyholders in respect of the policies to which the binder function relates, if that binder holder is—
(a)a non-mandated intermediary that is authorised to render "advice" as defined in the FAIS Act in respect of policies;
(b)a non-mandated intermediary that is an associate of another non-mandated intermediary that is authorised to render "advice" as defined in the FAIS Act in respect of policies.

 

Table

BINDER FUNCTION

MAXIMUM FEE PAYABLE

Enter into, vary or renew a policy - section 49A(1)(a) ("function (a)")

 

Determine the wording of a policy - section 49(A(1)(b) ("function (b)")

 

Determine premiums under a policy section 49A(1)(c) ("function (c)")

 

Determine the value of policy benefits under a policy - section 49A(1)(d) ("function (d)")

Function (a) only

3,5%

Function (a) and one or more of functions (b) - (d)

5%

One or more of functions (b) - (d) only

0%

Settle claims under a policy - section 49A(1)(a)

4%

 

(3)The Authority, subject to such conditions as the Authority may impose, may on application from an insurer grant approval to the insurer to pay a binder holder a fee in excess of the fees referred to in subregulation (2) if the Authority is satisfied that the fee is consistent with the principles referred to in regulation 3.20.

 

(4)Any fee referred to under subregulation (1) payable to a non-mandated intermediary that may perform the service or function contemplated in section 49(A)(1(e) of the Act under a binder agreement, may not constitute or be based on a percentage of the difference between an amount claimed or the maximum value of policy benefits payable under a policy and the policy benefits actually provided to a policyholder in settlement of a claim.

 

(5)Any fee referred to under this regulation 3.21, payable to a non-mandated intermediary that is a binder holder, must be disclosed to a policyholder, which disclosure must be included in the disclosures contemplated under regulation 6.3(1)(g).

[Regulation 3.21(5) substituted by regulation 5(r) of Notice No. 1015, GG 41942, dated 28 September 2018]

 

[Regulation 3.21 inserted by regulation 4(bb) of Notice No. 1437 of 2017]