Short-Term Insurance Act, 1998 (Act No. 53 of 1998)

Regulations

Regulations under the Short-term Insurance Act, 1998 (Act No. 53 of 1998)

Part 5 : Remuneration (Section 48)

Part 5B : Limitation on Remuneration for Binder Functions

5.8 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 5.7(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 48A(1)(a) ("function (a)")

Function (a) only

3,5%

Determine the wording of a policy - section 48A(1)(b) ("function (b)")

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

5%

Determine premiums under a policy - section 48A(1)(c) ("function (c)")

Determine the value of policy benefits under a policy - section 48A(1)(d) ("function (d)")

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

0%

Settle claims under a policy - section 48A(1)(e)

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 5.7(1).

 

(4)Any fee referred to under subregulation (1) payable to a non-mandated intermediary that may perform the service or function contemplated in section 48A(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 5.8, 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 6.2(1)(g).

 

[Regulation 5.8 inserted by regulation 5(d) of Act No. 1439 of 2017]