Insurance Laws Amendment Act

Link to law: http://www.gov.za/documents/insurance-laws-amendment-act
Published: 2008-11-05

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Insurance Laws Amendment Act 27 of 2008


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 521 Cape Town 5 November 2008 No. 31578
THE PRESIDENCY No. 1200 5 November 2008
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 27 of 2008: Insurance Laws Amendment Act, 2008.

ACT To a m e n d the Long- term Insurance Act , 1998, so as to subst i tute certain definitions; to a m e n d certain definitions; to delete certain definitions; to insert certain definitions; to subst i tute obsolete references; to further regulate the special provis ions concerning the powers of the Regis trar of Long- t erm Insurance; to further regulate the appo intment of and report ing by an audi tor; to further regulate reporting by a statutory actuary, and to m a k e further provis ion in respect of the at tendance of meet ings by a s tatutory actuary; to further regulate the audit commit tee ; to regulate certain acts in respect of providing financial ass is tance to purchase shares; to further regulate the maintenance of a financially sound condit ion; to further regulate the holding of assets; to m a k e provis ion in respect of the k inds and spread of assets; to further regulate investment in derivat ives; to provide for reports by experts on returns; to further regulate the award ing of bonuses or s imilar benefits to pol icyholders; to further regulate remunerat ion to intermediaries and to regulate b inder agreements ; to further regulate l imitations on the provis ions of certain policies; to further regulate the opt ion for p a y m e n t of ass istance benefits in m o n e y ; to further regulate the special provis ions concerning long- term insurers that are not publ ic companie s ; to a m e n d the power of the Minis ter to m a k e regulat ions; and to a m e n d Schedules 1 and 3 to the Act; to a m e n d the Short- term Insurance Act , 1998 , so as to subst i tute certain definitions; to a m e n d certain definitions; to delete a definition; to insert certain definitions; to subst i tute obsolete references; to further regulate the special provis ions concerning the powers of and reporting by the Regis trar of Short - term Insurance; to further regulate the condit ions of registration; to further regulate the appo intment of and reporting by an auditor; to m a k e provis ion in respect of the appo intment and removal of and reporting by a s tatutory actuary; to further regulate the audit commit tee ; to regulate certain acts in respect of provid ing financial ass is tance to purchase shares; to m a k e provis ion in respect of the maintenance of a financially sound condit ion; to further regulate the holding of assets; to m a k e provis ion in respect of the kinds and spread of assets; to a m e n d the arrangements regarding liabilities; to further regulate inves tment in der ivat ives; to provide for reports by experts on returns; to a m e n d and further regulate remunerat ion to intermediaries and binder agreements ; to m a k e textual al terat ions; to further regulate the special provis ions concerning short- term insurers that are not publ ic companie s ; to a m e n d the p o w e r of the Minis ter to m a k e regulat ions; to a m e n d Schedules 1 ,2 a n d 3 to the Act; and to provide for matters connected therewith .
Act No. 27, 2008 INSURANCE LAWS AMENDMENT ACT, 2008
BE IT E N A C T E D by the Parl iament of the Republ ic of South Africa, as fo l lows:— A m e n d m e n t of section 1 of Act 52 of 1998, as a m e n d e d by section 2 of Ac t l 7 of 2003
1. Section 1 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the insertion after the definition of "ass is tance po l i cy" of the following
definition: " 'Audit ing Profession Act ' means the Audi t ing Profession Act, 2005 (Act No . 26 of 2 0 0 5 ) ; " ;
(b) by the substitution for the definition of "aud i tor" of the following definition: " 'audi tor ' means an auditor registered in terms of the [Public Accountant s ' and Audi tors ' Act, 1991 (Act N o . 80 of 1991),] Audi t ing Profession Act and appointed in terms of section 19(1) or 21(1 )(a) of this A c t ; " :
(c) by the substitution for the definition of "fair va lue" of the following definition:
" 'fair value' has the meaning assigned to it in financial report ing s t andards ; " ;
(d) by the insertion after the definition of "fair v a l u e " of the following definitions:
" 'financial report ing s tandards ' has the meaning assigned to it in section 1 (1) of the Compan ies Act; 'financial s tatements ' has the meaning assigned to it in section 1(1) of the Compan ies Ac t ; " ;
(e) by the substi tution for the definition of " f u n d " of the fol lowing definition: " ' fund' m e a n s — (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[ , 1967 (Act No . 72 of 1967)]; and [(d) a permanent fund, establ ished bona fide for the purpose of
providing benefits to m e m b e r s in the event of s ickness , acc ident or unemployment , or of providing benefits to surviv ing spouses , chi ldren, dependants or nominees of deceased m e m b e r s , or mainly for those purposes; and
(e)] (d) any other person, arrangement or business prescribed by the Regis t rar ;" ;
(f) by the substitution for the definition of "health po l i cy" of the following definition:
" 'health pol icy' means a contract in terms of which a person, in return for a p remium, undertakes to provide policy benefits upon a health event , [but exc luding any contract— (a) of which the contemplated policy benef i ts—
(i) are someth ing other than a stated s u m of m o n e y ; (ii) are to be provided u p o n a person having incurred, and to
defray, expenditure in respect of any health service obta ined as a result of the health event concerned; and
(iii) are to be provided to any provider of a health service in return for the provis ion of such service; or
(b) (i) of which the pol icy-holder is a medical s c h e m e registered under the Medica l Schemes Act , 1967 (Act N o . 72 of 1967);
(ii) which relates to a part icular m e m b e r of the s c h e m e or to the beneficiaries of such m e m b e r ; and
(iii) which is entered into by the scheme to fund in who le or in part its liability to such m e m b e r or beneficiaries in t erms of its rules;
and includes a re- insurance policy in respect of such a contract ; ] and includes a reinsurance policy in respect of such a cont rac t—
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(a) exc luding any cont rac t— (i) that provides for the conduct ing of the business of a medical
scheme referred to in section 1(1) of the Medical Schemes Act; or
(ii) of which the pol icyholder is a medical scheme registered under the Medical Schemes Act, and which cont rac t— (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 m e m b e r or the beneficiaries of the member referred to in subparagraph (aa) in te rms of its rules; but
(b) specifically including, notwithstanding paragraph (a)(i), any contracts identified by the Minis ter by regulation under section 72 (2A) as a health pol icy ;" ;
(g) by the deletion of the definition of "market-re lated policy"; (h) by the insertion after the definition of 'market-re lated pol icy' of the
following definition: " 'Medical Schemes Act ' means the Medical Schemes Act , 1998 (Act No. 131 of 1998) ;" ;
(i) by the substitution for the definition of "Min i s t er" of the fol lowing definition:
" 'Minis ter ' means the [Minister of Finance or any other Minister to w h o m the administrat ion of this Act m a y be ass igned from t ime to t ime] Cabinet member responsible for finance:
(j) by the substitution for the definition of "publ ic c o m p a n y " of the fol lowing definition:
" 'public c o m p a n y ' means a company with a share capital which is a public company under section 19 of the Compan ies Act; '";
(k) by the substitution for the definition of "Reg i s trar" of the fol lowing definition:
" 'Regis trar ' means the Registrar or the Deputy Registrar of Long- te rm Insurance referred to in section [2(1)] 2 : " ; and
(l) by the insertion after the definition of "subs id iary" of the fol lowing definition:
" 'this Ac t ' includes any regulation made , or matter prescribed under this A c t ; " .
(m) by the insertion after the definition of 'unborn ' of the following definition: " 'widely-held c o m p a n y ' has the mean ing assigned to it in section 1(6) of the Compan ies Ac t . " .
Substitution of section 2 of Act 52 of 1998
2. The following section is hereby substituted for section 2 of the Long- te rm Insurance Act , 1998:
"Registrar of Long- term Insurance
2. The execut ive officer and a deputy executive officer ment ioned in section 1 of the Financial Services Board Act, shall be the Registrar and the Deputy Registrar of Long- term Insurance, respect ively ." .
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A m e n d m e n t of section 4 of Act 52 of 1998, as a m e n d e d by sect ion 3 of Ac t 17 of 2003
3 . Section 4 of the Long-term Insurance Act , 1998, is hereby amended by the substitution for subsection (4) of the following subsection:
" (4) (a) The Registrar may, in order to ensure compl iance with or to prevent a contravention of this Act, issue a directive to any person or persons to w h o m the provisions of this Act apply.
(b) A directive issued in terms of paragraph (a) m a y — (i) apply generally; or
(ii) be limited in its application to a part icular person or kinds of persons, which may, for purposes of this subsection, be defined either in relation to categories, types or in any other manner.
(c) A directive issued in terms of paragraph (a) takes effect on the date determined by the Registrar in the directive.
(d) In the event of a departure from section 3(2) or 4(1), (2) or (3) of the Promot ion of Adminis t ra t ive Justice Act, 2000 (Act No. 3 of 2000) , the directive must include a statement to that effect and the reasons for such departure.
(e) The Registrar may amend or revoke any issued directives. (f) The Registrar may, where a direct ive is issued to ensure the protection of the
public in general , publish the directive in the Gazette and any other media that the Registrar deems a p p r o p r i a t e . " .
A m e n d m e n t of section 7 of Act 52 of 1998
4. Section 7 of the Long- term Insurance Act , 1998, is hereby a m e n d e d — (a) by the substitution in subsection (2) for paragraph (d) of the following
paragraph: "(d) a medical scheme registered under the Medical Schemes Act, [1967
(Act No . 72 of 1967),] if and in so far as it acts in accordance with that A c t ; " ; and
(b) by the substitution in subsection (2) for paragraph (g) of the following paragraph:
"(g) an agricultural co-operat ive [or special farmers ' co-operat ive formed and incorporated] registered under the Co-opera t ives Act, [1981 (Act No . 91 of 1981)] 2005 (Act No. 14 of 2005) , or al lowed to continue to operate in terms of section 97 of that Act, if and in so far as it [provides under a s c h e m e or arrangement in terms of its statutes,] conducts long-term insurance business as part of its main objectives, and provides benefits, the amount of which is not guaranteed and in respect of which its liability is l imited to the amount standing to the credit of a fund specially mainta ined for that pu rpose . " .
A m e n d m e n t of section 10 of Act 52 of 1998, as a m e n d e d by sect ion 5 of Act 17 of 2003
5. Section 10 of the Long- term Insurance Act , 1998, is hereby amended by the substitution for paragraph (h) of the following paragraph:
"(h) reasonably necessary to ensure that the long-term insurance business concerned is carried on soundly [and in a m a n n e r whereby the long- term insurer will have assets wi th a fair value of not less than its l iabilities and capital adequacy requirement] in compl iance with section 2 9 ( 1 ) , " .
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A m e n d m e n t of sect ion 19 of Act 52 of 1998
6. Section 19 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsection (1) of the following subsect ion:
" (1 ) A long-term insurer shall [from t ime to t ime appoint , and] at all t imes have[,] one or more auditors appointed by it in accordance with the provisions of the Companies Act applicable to a widely-held c o m p a n y . " ;
(b) by the deletion of subsection (3); (c) by the substitution for subsection (4) of the following subsect ion:
" (4 ) If an auditor of a long-term insurer is a firm (as contemplated in the [Public Accountants ' and Audi tors ' Act , 1991 (Act N o . 80 of 1991)] Audit ing Profession Act) , the Regis t rar ' s last approval of the appointment [thereof] of that firm as auditor shall not lapse by reason of a change in the membersh ip of the firm if at least half of the members , after the change, were members of the firm when the appointment of the firm was last approved by the Regis t rar ." ;
(d) by the substitution for subsection (5) of the following subsect ion: " (5 ) Notwiths tanding anything to the contrary in any law contained,
the auditor of a long-term insurer sha l l— (a) whenever the auditor furnishes copies of a report or other document
or particulars contemplated in section [20(5)(b)] 4 5 ( l ) ( a ) and (3)fc) of the [Public Accountants ' a n d Audi tors ' Act , 1991] Audi t ing Profession Act , also furnish a copy thereof to the Registrar; and
(b) if the audi tor ' s appointment is terminated for any r e a s o n — (i) submit to the Registrar a s ta tement of what the auditor believes
to be the reasons for that termination; and (ii) if the auditor would , but for that terminat ion, have had reason
to submit [to the long-term insurer] a report contempla ted in section [20(5)(a)] 4 5 ( l ) ( a ) and (3)(c) of the [Public A c c o u n ­ tants ' and Audi tors ' Act , 1991] Audi t ing Profession Act, submit such a report to the Registrar: and
(c) inform the Registrar and the board of directors of the long-term insurer, without delay, in writing of any matter relat ing to the [affairs] business of the long-term insurer of which the auditor [became] becomes aware in the performance of the audi tor ' s functions as auditor and which, in the opinion of the auditor, consti tutes a contravention of section 29(1) or any other section of this Act or in future may prejudice the insurer ' s ability to comply with section 29(1) or any other section of this Act , which information must give a description of the matter and must include such other particulars as the auditor considers appropr ia te . " : and
(e) by the substitution for subsection (7) of the following subsect ion: " (7 ) [In addit ion to] The auditor of a long-term insurer mus t carry out
the duties assigned to the auditor of a long-term insurer by [the] this Act, the Act under which that insurer is incorporated and [under wh ich that insurer is incorporated or by] the [Public Accountant s ' and Audi tors ' Act , 1991, the Auditor shall] Audi t ing Profession Act, and in addition to those duties m u s t — (a) in relation to a statement forming part of the returns in respect of
which the auditor is required to [do so] submit in terms of section 36, examine that statement or part thereof and satisfy himself, herself or itself that it is properly [drawn up] prepared so as to comply with the requirements of this Act and express an opinion as to whether the statement or part thereof, including any annexure thereto, has in all material respects been prepared in accordance with [section 20] Chapter IV of the [Public A c c o u n t a n t s ' and Audi tors ' Act , 1991] Audit ing Profession Act; and
(b) carry out the other duties [provided in this Act or] prescr ibed by the Minis ter ." .
Act No. 27, 2008 INSURANCE LAWS AMENDMENT ACT, 2008
A m e n d m e n t of section 2 0 of Ac t 52 of 1998
7. Section 20 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution in subsection (5) for paragraph (b) of the following
paragraph: "(b) (i) without delay, report in writ ing to the board of directors of the
long-term insurer any matter relating to the business of the long-term insurer of which he or she becomes aware in the performance of his or her functions as statutory actuary and which, in his or her opinion, consti tutes a contravent ion of section 29(1) or any other section of this Act relat ing to the duties of the statutory actuary, or in future may prejudice the long-term insurer ' s ability to comply with section 29(1) or any other section of this Act relating to the dut ies of the statutory actuary, which report must give a descript ion of the matter and must include such other particulars as the statutory actuary considers appropriate: Provided that the report must be submit ted without delay also to the Registrar where , in the opinion of the statutory actuary, the ma t t e r— (aa) materially prejudices the insurer ' s ability to comply with
any of these sections; (bb) does not materially prejudice the insurer ' s ability to
comply with these sections, but the statutory actuary is of the opinion that immediate remedial action must be taken by the long-term insurer; and
(ii) if steps to rectify the matter are not taken by the board of directors of the long-term insurer to the satisfaction of the statutory actuary [, he or she shall forthwith report the mat ter to] within 30 days after the date of the report, wi thout delay inform the Regis t rar ." ;
(b) by the substitution in subsection (8) for paragraph (b) of the following paragraph:
"(b) be entitled t o — (i) attend and speak at a general meet ing of the long-term insurer;
and (ii) receive the notices and other communica t ions relat ing to a
general meet ing which a m e m b e r of that long-term insurer is entitled to receive;[and
(iii) be heard at a general meet ing on the business of the meet ing which concerns h im or her as statutory actuary . ]"; and
(c) by the addition to subsection (8) of the following paragraph: "(c) (i) attend and be entitled to speak at any meet ing of the board
of directors of the long-term insurer on the business of the meet ing which concerns the duties conferred on or assigned to him or her as statutory actuary by or under this Act and by any other law or code of professional practice; and
(ii) receive the notices and other communica t ions relating to any meet ing referred to in subparagraph (i) which a m e m b e r of the board of directors is entitled to r ece ive . " .
A m e n d m e n t of section 2 3 of Act 52 of 1998
8. Section 23 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsection (1) of the following subsect ion:
" (1 ) The board of directors of a long-term insurer shall appoint an audit commit tee of at least three members of w h o m at least two shall be [members of that board] independent non-execut ive directors within the meaning of section 269A(4)(b) and (c) of the Compan ie s A c t . " ;
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(b) by the substitution in subsection (3) for the words preceding paragraph (a) of the fol lowing words :
" (3 ) The functions of [an] the audit commit tee [shall, inter al ia, be] , in addition to the functions referred to in section 270A(1) of the Companies Act, a r e — " ;
(c) by the insertion after subsection (3) of the following subsection: " ( 3 A ) The audit commit tee may appoint an advisor or request any
employee of the long-term insurer to advise or assist it in the performance of the functions referred to in subsection ( 3 ) . " ; and
(d) by the substitution for subsection (4) of the following subsection: " (4 ) If the appointment or composi t ion of an audit commit tee is, in a
particular case , inappropriate or impractical or would serve no useful purpose, the Registrar may, subject to such condi t ions as the Registrar may determine, exempt the long-term insurer concerned from the requirements of subsection ( 1 ) . " .
A m e n d m e n t of section 24 of Act 52 of 1998, as a m e n d e d by section 8 of Act 17 of 2003
9. Section 24 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for the words preceding paragraph (a) of the following
words : "[A] Notwi ths tanding the provis ions of the Compan ies Act, a long-term insurer shall n o t — " ;
(b) by the substitution in paragraph (a) for subparagraph (ix) of the following subparagraph:
"( ix) al low its subsidiary to acquire directly or indirectly shares in it in terms of section 89 of the Compan ies A c t [ : ] ; " ; and
(c) by the addition to paragraph (a) of the fol lowing subparagraph: " (x) conclude a transaction contemplated in section 38(2A) of the
Compan ies A c t : " .
A m e n d m e n t of section 25 of Act 52 of 1998
10. Section 25 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution in subsection (2) for paragraph (a) of the following
paragraph: "(a) to or in the name of a trustee or custodian of a [unit trust] collective
investment scheme as defined in section 1 of the [Unit Trusts Control Act , 1981 (Act No. 54 of 1981)] Collective Investment Schemes Control Act, 2002 (Act No . 45 of 2002) , or [of] a [nominated c o m p a n y ] representat ive of [the] such trustee or custodian [approved by the Registrar] appointed in terms of section 68(6)(a) of the [Unit Trust Companie s ] Collect ive Investment Schemes Control Act , 2 0 0 2 ; " ;
(b) by the substitution in subsection (2) for paragraphs (c) and (d) of the following paragraphs:
"(c) for a period of not more than six months , to or in the name of [a s tockbroker] an authorised user or a [ company] nominee floated by [a s tockbroker] an authorised user for the purposes contem­ plated in section [12( l ) ( s ) ] 18(2)(l), read with section 36(1)(a), of the [Stock Exchanges Control Act , 1985] Securit ies Services Act, 2004 (Act No. 36 of 2004) , or to or in the name of a company controlled by a long-term insurer or an employee of the long-term insurer, if it is necessary that the shares be so allotted, issued or registered in order to facilitate delivery to the purchaser or to protect the rights of the beneficiary in respect of those shares;
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(d) to or in the name of a [person acting as a depos i tary institution by virtue of an authorisat ion under] part icipant as defined in section [2] 1 of the [Safe Depos i t of Securit ies Act , 1992 (Act No. 85 of 1992)] Securities Services Act, 2004, or of a [ c o m p a n y ] nominee contemplated in section [12( l ) (s ) ( i ) ] 36(1 )(b), read with section 39(2)(q), of the [Stock Exchanges Control Act , 1985] Securit ies Services Act . 2004: Provided that the [person] part icipant or [ m e m b e r ] nominee concerned is able, on request , to disclose the name of the beneficial shareholder on whose behalf shares are he ld ; " .
A m e n d m e n t of section 29 of Act 52 of 1998, as a m e n d e d by sect ion 10 of Act 17 of 2003
11. Section 29 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsections (2) and (3) of the following subsect ions:
" (2 ) A long-term insurer shall be deemed to have failed to comply with subsection (1) if [it does not h a v e ] — (a) it does not have assets as required by section 30; [or] (b) it does not have in the Republic assets as required by section 3 1 : or (c) it has not made provision for the liabilities and the capital adequacy
requirement referred to in sections 30 and 31 in accordance with the requirements of those sections and Schedule 3.
(3) A long-term insurer which fails to comply with subsection (1) shall, [within 30 days after becoming aware of it] without delay, notify the Registrar of the failure and furnish the reasons therefor."; and
(b) by the addition of the following subsect ions: " (4 ) A long-term insurer shall not declare or pay a dividend to its
shareholders— (a) while it fails or is likely to fail to comply with subsection (1); (b) if the declaration or payment would result in it failing or being
likely to fail to comply with subsection (1); or (c) if, after the declaration or payment , the aggregate value of assets
required by section 30 would be less than the aggregate value of its liabilities, issued share capital and non-distr ibutable reserves.
(5) A long-term insurer shall not declare or pay a dividend to its shareholders unless its statutory actuary has certified that the declaration or payment will not be contrary to subsect ion ( 4 ) . " .
A m e n d m e n t of section 30 of Act 52 of 1998, as a m e n d e d by sect ion 11 of Act 17 of 2003
12. Section 30 of the Long-term Insurance Act, 1998. is hereby amended by the deletion of subsect ions (2) and (3).
A m e n d m e n t of section 31 of Act 52 of 1998, as a m e n d e d by sect ion 12 of Act 17 of 2003
13. Section 31 of the Long- term Insurance Act, 1998. is hereby a m e n d e d — (a) by the substitution in subsection (1) for paragraph (a) of the following
paragraph: "(a) which have an aggregate value which, on any day, is not less than
the aggregate value, on that day, of those of its liabilities which have to be met in the Republ ic , and [ m i n i m u m ] its capital adequacy requirement , when the values of those assets are calculated by reference to their fair value and the values of those liabilities, other than the said l inked liabilities, and [ m i n i m u m ] capital adequacy requirement , are calculated as set out in Schedule 3; a n d " ;
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(b) by the substitution in subsection (1) for paragraph (c) of the fol lowing paragraph:
"(c) which have a fair value which, when expressed as a percentage of the aggregate value of its liabilities and [ m i n i m u m ] capital adequacy requirement referred to in paragraph (a), docs not exceed the percentage specified in the regulations in respect of particular kinds or categories of those assets, unless the Registrar otherwise approves either in advance or at any t ime after having received the notice referred to in section 2 9 ( 3 ) —
(i) in a particular case: (ii) for the specified period; and
(iii) subject to such condit ions as the Registrar may d e t e r m i n e . " ; and
(c) by the addition of the following subsection: " (3 ) Despite the requirement in subsection (1) that an asset must be
valued at fair value, if the Registrar is satisfied that the value of an asset when calculated in accordance with financial report ing s tandards does not reflect a reasonable value for purposes of this Act , the Registrar m a y — (a) appoint another person, at the cost of the insurer, to place a
reasonable value on that asset, which value so determined will be deemed to be the value of the asset; or
(b) direct a long-term insurer to calculate the value in a manner determined by the Registrar, which value so calculated will be deemed to be the value of the asse t . " .
A m e n d m e n t of section 34 of Act 52 of 1998, as a m e n d e d by sect ion 14 of Act 17 of 2003
14. Section 34 of the Long- term Insurance Act, 1998, is hereby amended by the substitution for subsection (2) of the following subsection:
" ( 2 ) A long-term insurer shall not invest in derivatives other than for one or more of the following reasons: (a) Derivat ives designated as an asset in respect of a l inked policy; (b) derivatives acquired out of or in respect of assets that are in excess of the
assets required to meet the long-term insurer ' s liabilities under long-term policies and capital adequacy requirement in terms of section 30(1) ;
(c) for the purpose of efficient portfolio management ; (d) for the purpose of reducing investment risk: Provided that— (i) in respect of paragraphs (a), (b) and (c), the long-term insurer will , or
reasonably expects to, have the asset at the settlement date of the derivat ive instrument which matches the obligations under that instrument and from which it can discharge those obligat ions;
(ii) in respect of paragraph (d), the statutory actuary has in writing agreed there to . " .
A m e n d m e n t of section 36 of Act 52 of 1998, as a m e n d e d by sect ion 15 of Act 17 of 2003
15. Section 36 of the Long- term Insurance Act , 1998, is hereby amended by the addition of the following subsection:
" (3 ) If the Registrar is satisfied that a statement forming part of the re turns furnished by the long-term insurer in terms of subsection (1) or (2) requires further investigation, the Registrar may by notice direct the long-term insurer to furnish him or her by a specific date or within a specific period with a r epor t— (a) in the medium and form; and (b) containing the required information,
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compiled by a person nominated by the Registrar at the cost of the long-term insurer ." .
Substitution of section 46 of Act 52 of 1998
16. The following section is hereby substi tuted for section 46 of the Long-term Insurance Act, 1998:
"Policy to be actuarial ly sound
46. (_1) A long-term insurer shall no t— (a) enter into any particular kind of long-term policy unless the statutory
actuary is satisfied that the p remiums , benefits and other values thereof are actuarially sound;
(b) make a distinction between the p remiums , 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 pol icyholder un l e s s— (i) it is done in accordance with the principles and pract ices 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 ( l ) (c ) ( i ) 'principles and pract ices 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 benefi t ." .
Subst i tut ion of section 49 of Act 52 of 1998
17. The following section is hereby substituted for section 49 of the Long- term Insurance Act, 1998:
'Limitation of remunerat ion to intermediaries
49 . N o consideration shall be offered or provided by a long-term insurer or a person on behalf of the long-term insurer or accepted by any independent intermediary for rendering services as intermediary as referred to in the regulations, other than commiss ion or remunerat ion contemplated in the regulations and otherwise than in accordance with the regu la t ions . " .
Insert ion of section 49A in Act 52 of 1998
18. The following section is hereby inserted after section 49 of the Long- te rm Insurance Act, 1998:
"Binder agreements
49A. (1) A long-term insurer may, in terms of a written agreement only, and in accordance with any requirements , l imitations or prohibi t ions that may be prescribed by regulat ion, al low 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, other than a long-term
reinsurance 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 c la ims under a long-term policy.
(2) A written agreement referred to in subsection (1) m u s t —
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(a) set out which of the activities referred to in subsect ion (1) that other person may perform and the particular k inds 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) state if that other person is authorised to de termine the wording of the policies referred to in paragraph (a), and if authorised, the extent to which and the c i rcumstances under which the word ing may be determined;
(d) state if that other person is authorised to de te rmine p remiums in respect of the policies referred to in paragraph (a), and if authorised, the gross p remiums or the basis for the calculation of gross p remiums that may be determined, and the extent to which and the c i rcumstances under which the premiums may be determined;
(e) state if that other person is authorised to de termine the value of policy benefits, and if authorised, the m a x i m u m 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 c i rcumstances under which the benefits may be determined;
(f) state if that other person is authorised to settle c la ims under the policies referred to in paragraph (a), and if authorised, the extent to which and the circumstances under which the c la ims may be settled:
(g) state the basis on which that other person will be remunera ted for services rendered in terms of paragraphs (b) to (f), which basis must be consistent with any requirements , l imitations or prohibi t ions as may be prescribed by regulation;
(h) oblige that other person t o — (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 remunerat ion payable to that other person in terms of an agreement contemplated in this section;
(ii) include the name of the long-term insurer underwri t ing the long-term policy in any adver t isement , brochure or similar communica t ion 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 al low the long-term insurer, its statutory actuary and its audi tors 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 pol icyholders , 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 c i rcumstances 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 pol icyholders .
(3) A written agreement referred to in subsect ion (1) . subject to any requirements , l imitations or prohibit ions as may be prescribed by regula­ t ion—
(a) may not authorise that other person to add an amount to any gross p remium referred to in subsection (2)(d);
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(b) may not authorise that other person to deduct any amount from any c la ims 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 m a y —
(a) render the services contemplated in subsection (l)(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 , l imitations or prohibit ions as may be prescr ibed by regulat ion; and
(b) not render any of the services contemplated in subsect ion (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) Despi te any term to the contrary contained in an agreement contemplated in subsection (1) the long-term insurer that entered into the agreement r e m a i n s — (a) responsible for compl iance with this Act; (b) l iable for any cla ims relating to policies included in the agreement ,
including any c la ims that may arise because of the failure of that other person to comply with the agreement ; and
(c) the owner of any information and documentat ion relat ing to the policies contemplated in the agreement , which must, upon terminat ion of the agreement , be returned to the long-term insurer.
(6) Any party to a written agreement referred to in subsect ion (1) must make a copy of that agreement available to the Registrar on reques t . " .
Substitution of section 53 of Ac t 52 of 1998
19. The following section is hereby substituted for section 53 of the Long- te rm Insurance Act, 1998:
"Option for p a y m e n t of policy benefits in m o n e y
53 . (1) [Notwithstanding] Despite the terms of an assis tance policy entered into before 1 June 2009 , the pol icyholder is entitled to demand that a policy benefit which is expressed otherwise than [ in] as a sum of money [shall] must be provided as a sum of money, in which case the sum of money mus t be equal in value to the cost the long-term insurer would have incurred had the policy benefit been provided otherwise than as a sum of money.
(2) W h e r e an assistance policy that provides for a policy benefit expressed otherwise than as a sum of money is entered into on or after 1 June 2009 . that policy m u s t — (a) provide that the policyholder is entitled to demand that the policy
benefit be provided as a sum of money in lieu of the benefit on the occurrence of the event insured against; and
(b) state the amount of the policy benefit that is to be provided as a sum of money.
(3) W h e r e a policy benefit expressed otherwise than as a sum of money is provided as a sum of money, the amount of that policy benefit may not exceed the m a x i m u m amount referred to in the definition of 'assis tance pol icy ' in section 1(1) of this Ac t . " .
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Subst i tut ion of section 54 of Act 52 of 1998
19A. The following section is hereby substituted for section 54 of the Long- term Insurance Act. 1998:
'Limitation on provis ions of certain policies
54 . (1) A long-term insurer may no t— (a) undertake to provide policy benefits, or provide policy benefits, under; (b) provide considerat ion upon the surrender of; or (c) make a loan upon the security of, a long-term policy contemplated in the regulat ions, o therwise than in accordance with the requirements and l imitations set out in the regulat ions.
(2) The requirements and limitations set out in regulat ions m a d e under subsection (1) apply from the inception of a policy, if the regulat ion so provide, irrespective of the fact that the policy was entered into before or after the commencemen t of this Act or the regula t ions ." .
A m e n d m e n t of section 66 of Act 52 of 1998
20. Section 66 of the Long- term Insurance Act , 1998, is hereby a m e n d e d — (a) by the substitution in subsection (1) for paragraphs (a) and (b) of the following
paragraphs: "(a) contravenes or fails to comply with a provision of a notice, direct ive or
request referred to in section 4(3) , (4) or (5)(a)( i) , 22(2) or 27(2) ; (b) contravenes or fails to comply with a provision of section 8( 1 )(a) or (b),
16(2). 23(1) , 28(1), 44(1) , 45 , 47 , 49 or 4 9 A ; " ; (b) by the substitution for subsection (2) of the following subsection:
" (2) A person, other than a long-term insurer, who contravenes or fails to comply with a provision of section 7( 1 )(a), 8(3), 20(5)(b), 26( 1) or (2) or 50(4) or (6), shall be guilty of an offence and liable on convict ion to a fine not exceeding R l 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such impr i sonment . " .
A m e n d m e n t of sect ion 67 of Act 52 of 1998
2 1 . Section 67 of the Long- term Insurance Act, 1998, is hereby amended by the substitution for paragraphs (a) and (b) of subsection (1) of the following paragraphs:
" ( a ) contravenes or fails to comply with a provision of a notice, directive or request referred to in section 4(2), (3) or (4), 22(1) or (2), 27(1) , 31(1), 35(1) or (2)(a) or 36(2);
(b) contravenes or fails to comply with a provision of section 7(1)(b), 8(2), 16(1), 17, 18, 23(1) or (2), 25(1), 29(3) . 36(1), 44(1) . 45 , 48(1) , 49 , 49A. 54 or 55 (1 ) ; " .
A m e n d m e n t of section 71 of Act 52 of 1998
22 . Section 71 of the Long- term Insurance Act , 1998, is hereby a m e n d e d — (a) by the insertion after subsection (2) of the following subsection:
" (2A) N o exempt ion granted under any law under which a long-term insurer is incorporated or registered shall consti tute an exempt ion from the provisions of this Ac t . " ; and
(b) by the substitution for subsection (3) of the following subsection: " (3) The financial s tatements of a long-term insurer, other than the
financial s tatements drawn up by the statutory actuary, shall be drawn up and presented in accordance with [General ly Accepted Account ing Pract ice] financial reporting standards applicable to a widely-held company . " .
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A m e n d m e n t of section 72 of Act 52 of 1998
23 . Section 72 of the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the insertion after paragraph (g) in subsection (1) of the following
paragraph: "(gA) prescribing in respect of section 49A, requirements , l imitat ions
or prohibit ions relating t o — (i) the agreements contemplated in section 49A(1) ;
(ii) any addit ions to gross p remiums or deduct ions from cla ims in respect of policies referred to in the agreements con tem­ plated in section 49A(1) ;
(iii) any considerat ion 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 attr ibutable to the policies referred to in the agreements contempla ted in section 49A(1) ; and
(v) the circumstances under which a person w h o 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 inter- mediary.";
(b) by the substitution for subsection (2) of the following subsection: " (2) Regulat ions made under this section m a y —
(a) differentiate be tween different kinds of insurers, policies, agree­ ments or contracts, which may, for the purposes of this sect ion, 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
(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 regula t ions ." ; and
(c) by the insertion after subsection (2) of the following subsect ions: "(2A)(a) The Minister, despite the definition of 'business of a
medical scheme ' in section 9(1) of the Medical Schemes Act, may make regulat ions identifying a kind, type or category of contract as a health policy.
(b) Regulat ions under paragraph (a)— (i) must be made on ly—
(aa) in consultation with the Minister of Heal th; (bb) after consultation between the National Treasury, the Registrar
and the Registrar of Medica l Schemes established under the Medical Schemes Act; and
(cc) after having regard to the objectives and purpose of the Medical Schemes Act, including the fol lowing principles entrenched therein— (A) communi ty rat ing: (B) open enrolment; and (C) cross-subsidisation within medical schemes ; and
(ii) must provide for a long-term insurer to submit specified informa­ tion on any product within a kind, type or category of contract referred to in paragraph (a) to the Registrar and the Registrar of Medical Schemes within any specified t imeframes;
(iii) may provide for matters relating to the design and market ing of any product within a kind, type or category of contract referred to in paragraph (a). (c) Where the Minister has made regulat ions referred to in
paragraph (a), the kind, type or category of contract identified as a health
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policy in the regulat ions, is subject to this Act and not the Medical Schemes Act .
(2B) Before regulat ions in terms of this Act are promulgated , the Minis ter must publish the draft regulations in the Gazette for public comment and submit the regulations to Parl iament, while it is in session, for parl iamentary scrutiny at least one month before their pro- mulga t ion . " .
A m e n d m e n t of Schedule 1 to Act 52 of 1998, as amended by sect ion 21 of Ac t 17 of 2003
24 . Schedule 1 to the Long- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substi tution in paragraph 1 for the definition of "der ivat ives" of the
following definition: " 'derivat ives ' m e a n s — (a) an option contract [as contemplated in the definition of 'securi-
t ies ' in section 1 of the Stock Exchanges Control Act , 1985 (Act N o . 1 of 1985)];
(b) a futures contract [and an opt ion contract as defined in section 1 of the Financial Marke t s Control Act , 1989 (Act N o . 55 of 1989)]; and
(c) a contract for differences;"; (b) by the insertion in paragraph 1 after the definition of "der ivat ives" of the
following definition: " 'futures contract ' means a standardised contract the effect of which is
(a) a person agrees to deliver to or receive from another person a certain quanti ty of corporeal or incorporeal things before or on a future date at a pre-arranged price; or
(b) an amount of money will be paid to or received from another person before or on a future date according to whether the pre-arranged value or price of—
(i) an asset: (ii) an index as a means of indicator that reflects changes in the
value of one or more groups of shares or securities on one or more exchanges :
(iii) currency; (iv) rate of interest; or (v) any other factor,
is h igher or lower before or on that future date than the pre-arranged value or p r i ce ; " ;
(c) by the substitution in paragraph 1 for the definition of " m a r g i n " of the following definition:
" 'margin' , in relation to a stock exchange [referred to in i tem 16(5)(a)(aa) of the Table to this Schedule] outside the Republ ic , means the margin as defined in the regulations issued or approved by the appropriate authority of the [state] country in which the stock exchange is situated or which is required by that stock e x c h a n g e ; " ;
(d) by the substitution in paragraph 1 for the definition of "marg in depos i t" of the following definition:
" 'margin deposi t ' means a margin with S A F E X and a stock exchange [referred to in i tem 16(5)(a)(aa) of the Table to this Schedule ] outside the Repub l i c ; " ;
(e) by the substitution in paragraph 1 of the definition of "marg in with S A F E X " for the following definition:
'marg in with S A F E X ' means the margin as defined in the rules of the South African Futures Exchange referred to in [section 17 of the Financial Marke t s Control Act , 1989] section 18 of the Securit ies Services Act, 2004 (Act No . 36 of 2 0 0 4 ) ; " ;
(f) by the insertion in paragraph 1 after the definition of "n .e . s ." of the following definition:
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" 'option contract ' means a s tandardised contract the effect of which is that a person acquires the op t ion— (a) to buy from or to sell to another person a certain quanti ty of
corporeal or incorporeal things before or on a future date at a pre-arranged price; or
(b) that an amount of money will be paid to or received from another person before or on a future date according to whether the pre-arranged value or price of—
(i) an asset; (ii) an index as a means of indicator that reflects changes in the
value of one or more groups of shares or securities on one or more exchanges ;
(iii) currency; (iv) rate of interest; or (v) any other factor,
is h igher or lower before or on that future date than the pre-arranged value or p r i ce ; " ;
(g) by the substitution in the Table for item 2 of the following item: "2 . A credit balance in an account with, or a deposit , including a
negotiable deposit or a bill accepted by, or a promissory note issued by. an institution [finally] registered under the Banks Act, 1990 (Act No. 94 of 1990), or the Mutual Banks Act, 1993 (Act N o . 124 of 1993) ." ;
(h) by the substitution in the Table for item 7 of the following item: "7, Securit ies issued by. and loans made to, the Local Authori t ies Loans
Fund Board under the repealed Local Authori t ies Loans Fund Act , 1984 (Act No . 67 of 1984) ." ;
(i) by the substitution in the Table for item 17 of the following item: "17. [Units] Part icipatory interests in a [unit trust] collect ive invest­
ment scheme registered in terms of the [Unit Trusts Control Act , 1981 (Act No . 54 of 1981)] Collective Investment Schemes Control Act, 2002 (Act No. 4 5 of 2 0 0 2 ) . " ;
(j) by the substitution in the Table for sub-item (b) of i tem 20 of the following sub-i tem:
"(b) a person in the Republ ic , excluding p remiums due and payable to the long-term insurer in respect of long-term insurance business carried on in the Republ ic ; a n d " ; and
(k) by the addition in the Table after item 20 of the following i tem: "21 . P remiums due and payable to the long-term insurer in respect of
long-term insurance business carried on in the R e p u b l i c " .
A m e n d m e n t of Schedule 3 to Act 52 of 1998, as a m e n d e d by sect ion 23 of Act 17 of 2003
25. Schedule 3 to the Long-term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution in paragraph 4(b) for sub-item (i) of the following
sub-i tem: (i) (aa) an amount , excluding a p remium in respect of a long-term
reinsurance policy, which remains unpaid after the expiry of a period of 12 months from the date on which it became due and payable;
(bb) any amount of premium that is due and payable , including a premium debited to an intermediary or a deferred instalment of a premium that remains unpaid to an insurer (irrespective of whether or not the p remium has been paid to an intermediary) , after the expiry of a period of 90 days from the dale on which it became due and payable in terms of the long-term policy, but excluding a premium in respect of a long-term re insurance pol icy;" ; and
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(b) by the substitution in paragraph 7 for subparagraph (1) of the following subparagraph:
" (1) The liabilities of a long-term insurer, other than its cont ingent liabilities under long-term policies, shall be determined in accordance with [South African Statements of General ly Accepted Account ing Pract ice] financial report ing s tandards appl icable to widely-held c o m p a n i e s . " .
A m e n d m e n t of Arrangement of Sect ions of Ac t 5 2 of 1998, as a m e n d e d by section 1 of Act 17 of 2003
26 . The Arrangement of Sect ions in Part VII of the Long-term Insurance Act . 1998. is hereby amended by the insertion after item 49 of the following item:
"49A. Binder a g r e e m e n t s " .
A m e n d m e n t of section 1 of Act 5 3 of 1998, as amended by section 25 of Act 17 of 2003
27. Section 1( 1) of the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for the definition of "accident and health po l icy" of the
following definition: " 'accident and health pol icy' means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits if a disability, health or death event contempla ted in the contract as a risk event occurs , and includes a reinsurance policy in respect of such a cont rac t— (a) excluding any contrac t—
(i) that provides for the conduct of the bus iness of a medical scheme referred to in section 1(1) of the Medica l Schemes Act; or
(ii) of which the pol icyholder is a medical scheme registered under the Medical Schemes Act and which con t rac t— (aa) relates to a particular member of the scheme or to the
beneficiaries of such member ; and (bb) is entered into by the medical scheme to fund in whole or
in part its liability to the m e m b e r or the beneficiaries of the member referred to in subparagraph (aa) in terms of its rules; but
(b) specifically including, despite paragraph (a)(i), any category of contracts identified by the Minister by regulat ion under section 70(2A) as an accident and health po l icy ;" ;
(b) by the insertion after the definition of "approved re insurance pol icy" of the following definition:
" 'Audit ing Profession Act ' means the Audi t ing Profession Act , 2005 (Act N o . 26 of 2 0 0 5 ) ; " ;
(c) by the substitution for the definition of "aud i tor" of the following definition: " 'auditor ' means an auditor registered in te rms of the [Public Accountant s ' and Audi tors ' Act , 1991 (Act No . 8 0 of 1991)] Audi t ing Profession Act and appointed in terms of section 19(1) or 20(1) of this A c t ; " ;
(d) by the insertion after the definition of "engineering po l i cy" of the fol lowing definitions:
" 'fair va lue ' has the mean ing assigned to it in financial report ing s tandards; 'financial reporting s tandards ' has the meaning ass igned to it in section 1(1) of the Compan ies Act ; 'financial s tatements ' has the mean ing assigned to it in section 1(1) of the Compan ies A c t ; " ;
(e) by the insertion after the definition of "manag ing execut ive" of the following definition:
" 'Medical Schemes Act ' means the Medical Schemes Act, 1998 (Act No . 131 of 1998) ;"
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(f) by the substitution for the definition of "Min i s t er" of the following definition:
" 'Minis ter ' means the [Minister of F inance or any other Mini s ter to w h o m the adminis trat ion of this Act m a y be ass igned from t ime to t ime] Cabine t m e m b e r responsible for f inance:" ;
(g) by the deletion of the definition of "Publ ic Accountant s ' and Audi tors ' Act";
(h) by the substitution for the definition of "public c o m p a n y " of the following definition:
" 'public c o m p a n y ' means a company with a share capital which is a public company under section 19 of the Compan ies A c t ; " ;
(i) by the substitution for the definition of "Reg i s trar" of the following definition:
" 'Regis trar ' means the Registrar or the Deputy Registrar of Short- term Insurance referred to in section [2(1)] 2 ; " ; and
(j) by the insertion after the definition of "short- term reinsurance po l i cy" of the following definition:
" 'statutory actuary' means an actuary appointed in accordance with section 19A(1) or 2 0 ( 1 ) ; " ; and
(k) by the insertion after the definition of "survival benefit" of the following definition:
" 'this Act ' includes any regulation made , or matter prescribed under this A c t ; " .
(l) by the insertion after the definition of " u n b o r n " of the following definition: " 'widely-held c o m p a n y ' has the meaning assigned to it in section 1(6) of the Compan ies Ac t . " .
Substitution of section 2 of Act 5 3 of 1998
28. The following section is hereby substituted for section 2 of the Short- term Insurance Act, 1998:
"Registrar of Short - term Insurance
2. The executive officer and a deputy executive officer ment ioned in section 1 of the Financial Services Board Act, shall be the Registrar and the Deputy Registrar of Short-term Insurance, respect ively." .
A m e n d m e n t of sect ion 4 of Act 5 3 of 1998, as amended by section 2 6 of Act 17 of 2003
29. Section 4 of the Short- term Insurance Act, 1998, is hereby amended by the substitution for subsection (4) of the following subsection:
" (4 ) (a) The Registrar may, in order to ensure compl iance with or to prevent a contravention of this Act, issue a directive to any person or persons to w h o m the provisions of this Act apply:
(b) A directive issued in terms of paragraph (a) m a y — (i) apply generally; or
(ii) be l imited in its application to a particular person or kinds of persons, which may, for purposes of this subsection, be defined either in relation to categories , types or in any other manner.
(c) A directive issued in terms of paragraph (a) takes effect on the date determined by the Registrar in the directive.
(d) In the event of a departure from section 3(2) or 4(1), (2) or (3) of the Promotion of Adminis t ra t ive Justice Act, 2000 (Act No . 3 of 2000) , the direct ive must include a s tatement to that effect and the reasons for such departure .
(e) The Registrar may amend or revoke any issued directives. (f) T h e Registrar may, where a directive is issued to ensure the protect ion of the
public in general , publish the directive in the Gazette and any other med ia that the Registrar deems appropr ia te . " .
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A m e n d m e n t of section 7 of Act 5 3 of 1998
30. Section 7 of the Short- term Insurance Act, 1998, is hereby amended by the substitution in subsection (2) for paragraphs (d), (f) and (g) of the following paragraphs :
"(d) a medical scheme registered under the Medical Schemes Act , [1967 (Act N o . 72 of 1967)] if and in so far as it acts in accordance with that Act;
(f) an agricultural co-operat ive [or special farmers ' co-operat ive formed and incorporated] registered under the Co-opera t ives Act, [1981 (Act No . 91 of 1981)] 2005 (Act N o . 14 of 2005) , or al lowed to cont inue to operate in terms of section 97 of that Act , if and in so far as it [provides , u n d e r a s c h e m e or arrangement in terms of its s tatutes] , as part of its main object ives , conducts short-term insurance business, and provides benefits the amount of which is not guaranteed and in respect of which its liability is l imited to the amount s tanding to the credit of a fund specially maintained for that purpose;
(g) the unemployment insurance fund established by the Unemploymen t Insur­ ance Act, [1966 (Act N o . 30 of 1966)] 2001 (Act N o . 6 3 of 2001) , if and in so far as it acts in accordance with that Act; or'".
A m e n d m e n t of section 10 of Act 53 of 1998
3 1 . Section 10 of the Short-term Insurance Act, 1998, is hereby amended by the substitution for paragraph (h) of the following paragraph:
" (h) reasonably necessary to ensure that the short- term insurance bus iness concerned is carried on soundly [and in a m a n n e r whereby the short - term insurer will have assets with a fair value of not less than its l iabil it ies and capital adequacy requirement] in compl iance with section 2 8 ( 1 ) , " .
A m e n d m e n t of section 19 of Act 53 of 1998
32 . Section 19 of the Short-term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsection (1) of the following subsect ion:
" (1) A short-term insurer shall at all l imes have , one or more auditors appointed by it in accordance with the provisions of the C o m p a n i e s Act applicable to a widely-held c o m p a n y . " ;
(b) by the delet ion of subsect ion (3): (c) by the substitution for subsection (4) of the following subsect ion:
" (4 ) If an auditor of a short-term insurer is a firm (as contempla ted in the [Public Accountant s ' and Audi tors ' Act , 1991 (Act N o . 80 of 1991)] Audi t ing Profession Act) , the Regis t rar ' s last approval of the appointment of that firm as auditor shall not lapse by reason of a change in the membersh ip of the firm if at least half of the members of the firm, after the change , were members when the appoin tment of the firm was last approved by the Regis t rar ." ;
(d) by the substitution for subsection (5) of the following subsect ion: " (5) Notwi ths tanding anything to the contrary in any law conta ined,
the auditor of a short-term insurer sha l l— (a) whenever the auditor furnishes copies of a report or other documen t
or part iculars contemplated in section [20(5)(b)] 4 5 ( l ) ( a ) and (3)(c) of the [Public Accountant s ' and Audi tors ' Act , 1991] Audi t ing Profession Act, also furnish a copy thereof to the Registrar ; and
(b) if the audi tor ' s appointment is terminated for any r e a s o n — (i) submit to the Registrar a statement of what the auditor bel ieves
to be the reasons for that termination; and
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(ii) if the auditor would, but for that terminat ion, have had reason to submit [to the short- term insurer] a report contemplated in section [20(5)(a)] 45(1 )(a) and (3)(c) of the [Publ ic A c c o u n ­ tants ' and Audi tors ' Act , 1991] Audi t ing Profession Act, submit such a report to the Registrar; and
(c) inform the Registrar and the board of directors of the short-term insurer, without delay, in writ ing of any mat ter relating to the [affairs] business of the short-term insurer of which the audi tor [became] becomes aware in the performance of the audi tor ' s functions as auditor and which, in the opinion of the auditor, consti tutes a contravention of section 28(1) or any other section of this Act, or in future may prejudice the insurer ' s ability to comply with section 28(1) or any other section of this Act , which information must give a description of the matter and must include such other particulars as the auditor considers appropr ia te . " ;
(e) by the substitution for subsection (7) of the following subsect ion:
" (7) The auditor of a short-term insurer must carry out the dut ies ass igned to the auditor of a short-term insurer by [the] this Act, the Act under which that insurer is incorporated and [under which that insurer is incorporated] the [Public Accountant s ' and A u d i t o r s ' Act , 1991] Audi t ing Profession Act, and in addition to those duties m u s t — (a) in relation to a statement forming part of the returns in respect of
which the auditor is required to submit in terms of section 35 , examine that statement or part thereof and satisfy himself, herself or itself that it is properly prepared so as to comply with the requirements of this Act and express an opinion as to whether the statement or part thereof, including any annexure thereto, has in all material respects been prepared in accordance with [section 20] Chapter IV of the [Public Accountant s ' and A u d i t o r s ' A c t , 1991] Audit ing Profession Act; and
(b) carry out the other duties prescribed by the Minis te r . " ; and (f) by the addition of the following subsect ions:
" (8) Without derogating from an audi tor ' s right to do so in respect of anything which is material to the carrying out of the audi tor ' s dut ies , an auditor shall not be required to examine or express an opinion in relation to a statement forming part of a return, report or certificate or to the part iculars thereof, in respect of which a statutory actuary is required, in terms of this Act, to make an examinat ion, give an attestation or express an opinion.
(9) An auditor may rely on the work performed by the statutory actuary in relation to the financial affairs of a short- term insurer, when the auditor expresses an opinion in relation to the financial affairs of that short-term insurer in terms of this Act or any other law, subject to compl iance with the prevailing audit ing s t anda rds . " .
Insertion of section 19A in Act 53 of 1998
33 . The following section is hereby inserted after section 19 of the Short- term Insurance Act , 1998:
"Statutory actuary
19A. (1) A short-term insurer shall from t ime to t ime appoint, and at all t imes have, a statutory actuary under the c i rcumstances determined by the Registrar, either generally or in a particular case .
(2) A short- term insurer may appoint an alternate to act in the place of its statutory actuary during his or her absence for any reason.
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(3) No person other than a natural person w h o is permanent ly resident in the Republic , is a Fel low of the Actuarial Society of South Africa and has, as an actuary, appropriate practical exper ience relat ing to short-term insurance business, shall be appointed as a statutory actuary or his or her alternate.
(4) No appointment of a statutory actuary or his or her alternate shall take effect unless it has been approved by the Registrar.
(5) The statutory actuary of a short- term insurer sha l l— (a) submit to the Registrar, if his or her appoin tment is for any reason
terminated, a s tatement of what he or she bel ieves to be the reasons for that termination; and
(b) (i) without delay, report in writ ing to the board of directors of the short-term insurer any matter relating to the business of the short-term insurer of which he or she becomes aware in the performance of his or her functions as statutory actuary and which, in his or her opinion, const i tutes a contravent ion of section 28(1) or any other section of this Act relating to the duties of the statutory actuary, or in future may prejudice the short-term insurer ' s ability to comply with section 28( 1) or any other section of this Act relating to the duties of the statutory actuary, which report must give a descript ion of the matter and must include such other part iculars as the statutory actuary considers appropriate: Provided that the report must be submitted without delay also to the Registrar where , in the opinion of the statutory actuary, the ma t t e r— (aa) materially prejudices the insurer 's ability to comply with
any of these sections; (bb) does not materially prejudice the insurer ' s ability to
comply with these sections, but the statutory actuary is of the opinion that immedia te remedial action must be taken by the short-term insurer; and
(ii) if steps to rectify the matter are not taken by the board of directors of the short-term insurer to the satisfaction of the statutory actuary within 30 days after the date of the report, without delay inform the Registrar.
(6) (a) The furnishing, in good faith, by a statutory actuary of a report or information in terms of subsection (5) shall not be deemed to const i tute a contravention of a provision of a law or a breach of a provision of a code of professional conduct to which he or she is subject.
(b) The failure, in good faith, by a statutory actuary to furnish a report or information in terms of this section shall not confer upon any person a right of action against the statutory actuary which, but for that failure, that person would not have had.
(7) In addition to duties assigned to the statutory actuary by any other law or a code of professional practice, the statutory actuary sha l l— (a) in relation to a s tatement forming part of the re turns in respect of
which he or she is required to submit in te rms of section 35 . examine that s tatement and satisfy himself or herself that it is properly d rawn up so as to comply with the requirements of this Act and attest or, as the case may be, express an opinion in connect ion with that s ta tement; and
(b) carry out the other duties provided for in this Act or prescribed by the Minister.
(8) A statutory actuary sha l l— (a) have the right of access at all t imes to the account ing records and other
books and documents of the short-term insurer and be entitled to require from the directors or officers of that insurer the information
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and explanat ions he or she deems necessary for the carrying out of his or her duties;
(b) be entitled t o — (i) attend and speak at a general meeting of the short- term insurer;
(ii) receive the notices and other communica t ions relating to a general meet ing referred to in subparagraph (i) that a m e m b e r of that short-term insurer is entitled to receive; and
(c) (i) attend and be entitled to speak at any meet ing of the board of directors of the short-term insurer on the business of the meet ing which concerns the duties conferred on or ass igned to him or her as statutory actuary by or under this Act and by any other law or code of professional practice; and
(ii) receive the notices and other communica t ions relating to any meet ing referred to in subparagraph (i) which a m e m b e r of the board of directors is entitled to rece ive . " .
Subst i tut ion of section 20 of Act 5 3 of 1998
34 . The following section is hereby substituted for section 2 0 of the Short- term Insurance Act . 1998:
"Appointment of auditor or statutory actuary by Registrar
20. (1) If a short-term insurer for any reason fails to appoint an audi tor or statutory actuary, the Registrar may, notwi ths tanding sections 269(4) and 271 (1) of the Compan ies Act, but subject to section 19 or 19A of this Act, appoint an auditor or statutory actuary for that short-term insurer.
(2) A person or firm appointed under subsect ion (1) as auditor or statutory actuary of a short-term insurer shall be deemed to have been appointed by the short-term insurer in accordance with this A c t . " .
A m e n d m e n t of sect ion 21 of Act 53 of 1998
35. Section 21 of the Short- term Insurance Act, 1998, is hereby amended by the substitution for subsection (1) of the following subsection:
" ( 1 ) The Regis t rar may by notice require a short-term insurer to terminate the appointment of a director, managing execut ive, public officer[or].. auditor or statutory actuary of that short-term insurer, if the person or firm concerned is not fit and proper to hold the office concerned . " .
A m e n d m e n t of section 22 of Act 5 3 of 1998
36. Section 22 of the Short-term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsection (1) of the following subsect ion:
" (1 ) The board of directors of a short-term insurer shall appoint an audit commit tee of at least three member s of w h o m at least two shall be [members of that board] independent non-execut ive directors within the meaning of section 269A(4)(b) and (c) of the Compan ies A c t . " ;
(b) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words :
" (3 ) The functions of the audit commit tee , in addition to the functions referred to in section 270A(1) of the Compan ies Act, shall [ inter al ia,] b e — " ;
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(c) by the insertion after subsect ion (3) of the following subsect ion: " ( 3 A ) The audit commit tee may appoint an advisor or request any
employee of the short-term insurer to advise or assist it in the performance of the functions referred to in subsection ( 3 ) . " ; and
(d) by the substitution for subsection (4) of the following subsection: " (4 ) If the appointment or composi t ion of an audit commi t t ee is, in a
part icular case, inappropriate or impractical or would serve no useful purpose , the Registrar may, subject to such condi t ions as the Registrar may determine , exempt the short-term insurer concerned from the requirements of subsect ion ( l ) . " .
A m e n d m e n t of sect ion 23 of Act 53 of 1998, as a m e n d e d by section 31 o f Act 17 of 2003
37 . Section 23 of the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for the words preceding paragraph (a) of the following
words : "[A] Despite the provisions of the Compan ies Act a short- term insurer shall n o t — " ;
(b) by the substitution in paragraph (a) for subparagraph (ix) of the following subparagraph: " ( ix) al low its subsidiary to acquire directly or indirectly shares in it in terms
of section 89 of the Companies A c t [ : ] ; " ; and (c) by the addition to paragraph (a) of the following subparagraph:
" (x ) conc lude a transaction contemplated in section 38(2A) of the Co mp a­ nies A c t : " .
A m e n d m e n t of sect ion 24 of Act 5 3 of 1998
38. Section 24 of the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution in subsection (2) for paragraph (a) of the fol lowing
paragraph: "(a) to or in the name of a trustee or custodian of a [unit trust] collect ive
investment scheme as defined in section 1 of the [Unit Trusts Control Act , 1981 (Act N o . 54 of 1981)] Col lect ive Investment Schemes Control Act , 2002 (Act N o . 45 of 2002) , or [of] a [nominated c o m p a n y ] representat ive of [ the] such trustee or custodian [approved by the Registrar] appointed in terms of section 68(6) (a) of the [Unit Trust C o m p a n i e s ] Col lect ive Inves tment Schemes Control Act, 2 0 0 2 ; " ; and
(b) by the substitution in subsection (2) for paragraph (d) of the fol lowing paragraph:
"(d) to or in the name of a [person act ing as a depos i tary institution by virtue of an authorisat ion under ] part icipant as defined in section [2] 1 of the [Safe Deposi t of Securit ies Act , 1992 (Act N o . 85 of 1992)] Securit ies Services Act . 2004 (Act No. 36 of 2004) , or of a [ company] nominee contemplated in section [12( l ) (s ) ( i ) ] 36(1)(b) read with section 39(2)(g) of the [Stock Exchanges Control Act , 1985] Securit ies Services Act, 2004: Provided that the [person] participant or [member ] nominee concerned is able, on request , to disclose the name of the beneficial shareholder on whose behalf shares are he ld ;" .
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Substitution of section 28 of Act 53 of 1998
39. The following section is hereby substituted for section 28 of the Short- term Insurance Act, 1998:
"Maintenance of financially sound condit ion
28. (1) A short-term insurer shall at all t imes maintain its business in a financially sound condition b y — (a) having assets; (b) providing for its liabilities and capital adequacy requirement ; and (c) generally conduct ing its business , so as to be in a posit ion to meet its liabilities and capital adequacy requirement at all t imes.
(2) A short- term insurer shall be deemed to have failed to comply with subsection (1) if— (a) it does not have assets as required by section 2 9 : (b) it does not have in the Republ ic assets as required by section 30; or (c) it has not made provision for the liabilities and the capital adequacy
requirement referred to in [section] sect ions 29, 30 and 32 in accordance with the requi rements of [that sect ion] those sections and Schedule 2.
(3) A short-term insurer which fails to comply with subsection (1) shall, [within 30 days after becoming aware of it] without delay, notify the Registrar of the failure and furnish the reasons therefor.
(4) A short- term insurer shall not declare or pay a d iv idend to its shareholders— (a) [if, and for as long as,] while it fails or is likely to fail to comply with
subsection (1)[, or ] ; (b) if the declaration or paymen t [of the d iv idend] would result in it
failing or being likely to fail to comply with subsection (1)[ .] ; or (c) if, after the declaration or payment the aggregate value of assets
required by section 29 would be less than the aggregate value of liabilities, issued share capital and non-distr ibutable r e se rves . " .
Substitution of sect ion 29 of Act 5 3 of 1998
40. The following section is hereby substi tuted for section 29 of the Short- term Insurance Act, 1998:
"Assets
29 . (1) A short-term insurer shall have assets the aggregate value of which, on any day, is not less than [the aggregate of— (a)] the aggregate value on that day of its liabilities[;] and its capital
adequacy requirement [(b) the addit ional a m o u n t calculated as prescr ibed by regulat ion] , when the values of those assets , [and] liabilities and capital adequacy requirement are calculated in accordance with Schedule 2.
(2) A short-term insurer shall, subject to section 3 1 , have assets in the Republ ic of the kinds specified in Schedule 1, the aggregate value of which on any day is not less than [the aggregate of—(a)] the aggregate value on that day of those of its liabilities which are to be
met in the Republ ic[ ; ] and its capital adequacy requirement in respect of those liabilities
[(b) the addit ional a m o u n t calculated as prescr ibed by regulation,] when the values of those assets, [and] liabilities and capital adequacy requirement are calculated in accordance with Schedule 2 . " .
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A m e n d m e n t of section 3 0 of Ac t 53 of 1998
4 1 . Section 30 of the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for subsection (1) of the following subsection:
'"(1) Subject to section 31 and subsection (2), the assets which a short- term insurer is required in terms of section 29(2) to have in the Republ ic shall, at their fair value, in respect of the part icular kinds or categories of assets specified by regulation, when expressed as a percentage of the aggregate value of the liabilities and the [addit ional a m o u n t ] capital adequacy requirement referred to in section 29(2) , not exceed the percentage specified by regulation in relation to those kinds or categories of asse t s . " ; and
(b) by the addition of the following subsection: " (3) Despi te the requirement in subsection (1) that an asset mus t be
valued at fair value, if the Registrar is satisfied that the value of an asset, when calculated in accordance with financial report ing s tandards, does not reflect a reasonable value for purposes of this Act , the Registrar m a y — (a) appoint another person, at the cost of the insurer, to place a
reasonable value on that asset, which value so de termined will be deemed to be the value of the asset; or
(b) direct the short-term insurer to calculate the value in a manne r which the Registrar determines , which value so calculated will be deemed to be the value of the asse t ." .
A m e n d m e n t of section 32 of Act 53 of 1998
42 . Section 32 of the Short-term Insurance Act , 1998. is hereby a m e n d e d — (a) by the deletion in subsection (1) of paragraph (c); and (b) by the substitution for subsect ions (2) and (3) of the fol lowing subsect ions:
" (2) If an unexpired risk provision is considered to be necessary, the insurer shall determine the amount thereof in consul ta t ion with its auditor and, where a statutory actuary has been appointed, its statutory actuary.
(3) For the purposes of subsection (1). an approved re insurance policy entered into with an insurer as contemplated in paragraph (d) of the definition of 'approved reinsurance pol icy ' in section 1, shall not be deemed to cover the liabilities of a short-term insurer calculated in terms of subsection (1)(a)[,] and (b) [and (c)], to an amount exceeding the amount of the security referred to in that pa ragraph . " .
A m e n d m e n t of sect ion 3 3 of Act 5 3 of 1998, as amended by section 3 3 of Ac t 17 of 2003
43 . Section 33 of the Short-term Insurance Act, 1998, is hereby amended by the substitution for subsection (2) of the following subsection:
" (2 ) A short-term insurer shall not invest in derivat ives other than for one or more of the following reasons: (a) Derivat ives acquired out of or in respect of assets that are in excess of the
assets required to meet the short- term insurer 's liabilities under short- term policies and capital adequacy requirement in terms of section 29;
(b) for the purpose of reducing investment risk [or for efficient portfol io m a n a g e m e n t ; a n d ] ; or
(c) [in such a m a n n e r ] for the purpose of efficient portfolio managemen t . Provided that the short- term insurer will , or reasonably expects to. have the asset at the set t lement date of the derivative instrument which matches [its] the obl igat ions under that instrument and from which it can discharge those ob l iga t ions . " .
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A m e n d m e n t of sect ion 35 of Act 53 of 1998
44 . Section 35 of the Short-term Insurance Act, 1998, is hereby amended by the addition of the fol lowing subsection:
" (3 ) If the Registrar is satisfied that a s tatement forming part of the returns furnished by the short-term insurer in terms of subsection (1) or (2) requires further investigation, the Registrar may by notice direct the short- term insurer to furnish him or her by a specific date or within a specific period with a r epor t— (a) in the med ium and form; and (b) containing the required information, compi led by a person nominated by the Registrar at the cost of the short-term insurer ." .
Subst i tut ion of section 48 of Act 53 of 1998
45 . The following section is hereby substituted for section 48 of the Short- term Insurance Act , 1998:
"[Intermediaries: remunerat ion and binder agreements ] Independent intermediaries: remunerat ion
48. N o considerat ion shall he offered or provided by a short- term insurer or a L loyd ' s broker or a representative of such insurer or broker or any person on behalf of such insurer or broker, or accepted by any independent intermediary, other than commiss ion or remunera t ion contemplated in the regulations and for rendering services as intermediary otherwise than in accordance with the regula t ions ." .
Insertion of section 48A in Act 53 of 1998
46. The following section is hereby inserted after section 4 8 of the Short- term Insurance Act, 1998:
"Binder agreements
48A. (1) A short-term insurer or a L loyd ' s underwri ter may, in terms of a written agreement only, and in accordance with any requirements , l imitations or prohibit ions that may be prescribed by regulat ion, al low another person to do any one or more of the fol lowing on behalf of that insurer: (a) enter into, vary or renew a short-term policy, other than a short- term
reinsurance policy, on behalf of that insurer or L loyd ' s underwri ter ; (b) determine the wording of a short-term policy; (c) determine p remiums under a short-term policy; (d) determine the value of policy benefits under a short- term policy; (e) settle c la ims under a short-term policy.
(2) A written agreement referred to in subsection (1) m u s t — (a) set out which of the activities referred to in subsection (1) that other
person may perform and the particular kinds of short- term policies in respect of which those activities may be performed;
(b) set out the particular kinds of short-term policies which may be entered into, varied or renewed by that other person;
(c) state if that other person is authorised to de termine the wording of the policies referred to in paragraph (a), and if authorised, the extent to which and the c i rcumstances under which the wording may be determined;
(d) state if that other person is authorised to de te rmine p remiums in respect of the policies referred to in paragraph (a), and if authorised, the gross p remiums or the basis for the calculation of gross p r emiums that may be determined, and the extent to which and the c i rcumstances under which the p remiums may be determined;
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(e) state if that other person is authorised to determine the value of policy benefits, and if authorised, the m a x i m u m value of the policy benefits that may be determined under each kind of short- term policy referred to in paragraph (a), and the extent to which and the c i rcumstances under which the benefits may be determined;
(f) state if that other person is authorised to settle c la ims under the policies referred to in paragraph (a), and if authorised, the extent to which and the c i rcumstances under which the c la ims 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 , l imitat ions or prohibi t ions as may be prescribed by regulation;
(h) oblige that other person t o — (i) disclose to pol icyholders of policies referred to in paragraph
(a)~ (aa) the name of the relevant short-term insurer or, in the case
of Lloyd ' s underwri ters , the term 'certain underwri ters at L l o y d ' s ' , and the fact that that other person is act ing in terms of an agreement contemplated in this section; and
(bb) any remunerat ion payable to that person in terms of an agreement contemplated in this section;
(ii) include the name of the short- term insurer or, in the case of L loyd ' s underwri ters underwri t ing the short- term policy, the term 'certain underwriters at L l o y d ' s ' in any advert isement , brochure or similar communica t ion which relates to the short-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 al low the short-term insurer or L loyd ' s underwriter , its statutory actuary, if appointed, and its auditors full and unfettered access to those books of account and records; and
(iv) make available to the short-term insurer or L loyd ' s under­ writer, its statutory actuary, if appointed, and its auditors the policies referred to in paragraph (a) and any information relating thereto, including the names , identity numbers and contact details of pol icyholders , insured persons and benefi­ ciaries, upon request;
((') prohibit that other person to delegate , assign or subcontract any of the functions referred to in paragraphs (b) to (f) to another person;
(j) state the c i rcumstances 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 pol icyholders .
(3) A written agreement referred to in subsect ion (1), subject to any requirements , l imitations or prohibit ions as may be prescribed by regula­ t ion— (a) may not authorise that other person to add an amoun t to any gross
p remium 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 part icipate
in the profits attributable to the policies referred to in subsect ion 2(a). (4) A person that entered into an agreement contempla ted in subsect ion
(1) with a short-term insurer or L loyd ' s underwri ter m a y — (a) render the services contemplated in subsect ion (1)(a) to (e) in respect
of any kind of short-term policy issued by that short- term insurer or
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Lloyd ' s underwri ter identified in the agreement only in accordance with any requirements , l imitations or prohibit ions as may be pre­ scribed by regulat ion; and
(b) not render any of the services contemplated in subsection (l)(a) to (e) in respect of any kind of short-term policy issued by that short- term insurer or L loyd ' s underwri ter not identified in the agreement .
(5) Despi te any term to the contrary contained in an agreement contemplated in subsection (1), the short-term insurer or L loyd ' s under- writer that entered into the agreement r e m a i n s — (a) responsible for compl iance with this Act ; (b) liable for any claims relat ing to policies included in the agreement ,
including any cla ims that may arise because of the failure of that other person to comply with the agreement ; and
(c) the owner of any information and documenta t ion relating to the policies contemplated in the agreement , which must , upon terminat ion of the agreement , be returned to the short-term insurer or L loyd ' s underwriter.
(6) Any party to a written agreement referred to in subsection (1) mus t on request m a k e a copy of that agreement available to the Regis t rar ." .
A m e n d m e n t of sect ion 57 of Act 53 of 1998
47. Section 57 of the Short- term Insurance Act, 1998, is hereby amended by the substitution for subsection (5) of the following subsection:
" ( 5 ) The Lloyd ' s representat ive shall comply, with the necessary c h a n g e s — (a} with section 19( 1), (2), (3) and [(4)] (5) in respect of the L loyd ' s Trusts as if
he or she were a short- term insurer; and (b) with section 19A in respect of the L l o y d ' s Trusts as if he or she were a
short-term insurer ." .
A m e n d m e n t of sect ion 63 of Act 53 of 1998
48. Section 63 of the Short- term Insurance Act, 1998, is hereby amended by the substitution for subsect ion (4) of the following subsection:
" (4 ) (a) Section 19(5), (6), [and] (7), (8) and (9) shall apply with the necessary changes in relation to the auditor appointed by virtue of section 57(5) (a ] in respect of each of the L loyd ' s Trusts as if the reference to section 28( 1) in section 19(5)(c) were a reference to section 60 and the reference to section 35 in section 19(7)(a) were a reference to section 58(1) and paragraph 7 of Schedule 3.
(b) Section 19A shall apply with the necessary changes in relation to the statutory actuary appointed by virtue of section 57(5)(6) in respect of each of the L loyd ' s Trusts as if the reference to section 28( 1) in section 19A(5)(b)(i) were a reference to section 60 and the reference to section 35 in section 19A(7)(a) were a reference to section 58(1) and paragraph 7 of Schedule 3 . " .
A m e n d m e n t of sect ion 64 of Act 5 3 of 1998
49. Section 64 of the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution in subsection (1) for paragraphs (a) and (b) of the fol lowing
paragraphs: "(a) cont ravenes or fails to comply with a provision of a notice, direct ive
or reques t referred to in section 4(3) , (4) or (5)(a)(i) , 21(2) or 26(2) ; (b) contravenes or fails to comply with a provision of section 8( 1 )(a) or
(b) or (5), 16(2), 22(1) , 27(1), 43(1) , 44 , 45 , 46 , 48 or 4 8 A ; " .
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(b) by the substitution for subsection (2) of the following subsection: " (2 ) A person, other than a short-term insurer, w h o contravenes or fails
to comply with a provision of section 7(1 )(a) or (b), 8(2). 19A(5)(b), 25(1) or (2) or 49(4) or (6), shall be guilty of an offence and liable on convict ion to a fine not exceeding R l 000 0 0 0 or to impr isonment for a period not exceeding 10 years or to both such fine and such imprison­ m e n t . " .
A m e n d m e n t of section 65 of Ac t 53 of 1998
50. Section 65 of the Short-term Insurance Act, 1998, is hereby amended by the substitution in subsection (1) for paragraphs (a) and (b) of the fol lowing paragraphs:
" ( a ) contravenes or fails to comply with a provision of a notice, direct ive or request referred to in section 4(2) , (3) or (4), 21(1) or (2) , 26(1) , 34(2)(a) or 35(2);
(b) contravenes or fails to comply with a provision of section 16(1), 17, 18, 19A(5)(b), 22( 1) or (2), 24( 1), 35( 1), 43( 1), 44 . 4 5 , 46 , 47 . 4 8 or 4 8 A ; " .
A m e n d m e n t of sect ion 69 of Act 53 of 1998
5 1 . Section 69 of the Short- term Insurance Act, 1998, is hereby amended b y — (a) the insertion after subsection (2) of the following subsect ion:
" ( 2 A ) No exempt ion granted under any law under which a short- term insurer is incorporated or registered shall consti tute an exempt ion from the provisions of this A c t . " ; and
(b) the substitution for subsection (3) of the following subsect ion: " (3) The financial s tatements of a short- term insurer, other than the
financial s tatements drawn up by the statutory actuary, shall be drawn up and presented in accordance with [General ly Accepted Account ing Pract ice] financial report ing s tandards appl icable to a widely-held c o m p a n y . " .
A m e n d m e n t of sect ion 70 of Act 53 of 1998
52 . Section 70 of the Short-term Insurance Act , 1998, is hereby a m e n d e d — (a) by the deletion in subsection (1) of paragraph (d); (b) by the insertion after paragraph (g) in subsection (1) of the following
paragraph: " ( g A ) prescribing in respect of section 48A, requi rements , l imitat ions
or prohibit ions relating t o — (i) the agreements contemplated in section 48A(1) ;
(ii) any addit ions to gross p remiums or deduct ions from claims in respect of policies referred to in the agreements contempla ted in section 48A(1) ;
(iii) any considerat ion that may be offered or provided from, by or on behalf of a short-term insurer or L loyd ' s underwri ter to a person that enters into an agreement contempla ted in section 48A(1) with a short-term insurer or L loyd ' s underwri ter ;
(iv) any participation or sharing in the profits at tr ibutable to the policies referred to in the agreements contempla ted in section 48A(1) ; and
(v) the c i rcumstances under which a person who has entered into an agreement contemplated in section 48A(1) may render services in respect of a policy not referred to that person by the relevant insurer, L loyd ' s underwri ter or an independent in termediary ." ;
(c) by the substitution for subsection (2) of the following subsect ion: " (2 ) Regulat ions made under this section m a y —
(a) differentiate between different kinds of insurers, pol icies , agree­ ments 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 ;
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(b) be limited in its application to a part icular 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
(c) prescribe a fine or a period of impr isonment not exceeding one year for a contravention of or a failure to comply with a provision of the regula t ions ." ; and
(d) by the insertion after subsection (2) of the following subsect ions: " (2A) (a ) The Minister, despi te the definition of 'bus iness of a
medical s cheme ' in section 9(1) of the Medical Schemes Act, may make regulat ions identifying a kind, type or category of contract as an accident and health policy.
(b) Regulat ions under paragraph (a)— (i) must be made o n l y —
(aa) in consultation with the Minis ter of Health; (bb) after consultat ion between the National Treasury, the
Registrar and the Registrar of Medical Schemes es tab­ lished under the Medical Schemes Act; and
(cc) after having regard to the object ives and purpose of the Medical Schemes Act, including the following principles entrenched there in— (A) communi ty rat ing; (B) open enrolment ; and (C) c r o s s - s u b s i d i s a t i o n w i th in m e d i c a l s c h e m e s ; a n d
(ii) must provide for a short- term insurer or L l o y d ' s underwri ter to submit specified information on any product within a kind, type or category of contract referred to in paragraph (a) to the Registrar and the Registrar of Medical Schemes within any specified t imeframes;
(iii) may provide for matters relating to the design and marke t ing of any product within a kind, type or category of contract referred to in paragraph (a).
(c) Where the Minister has made regulat ions referred to in paragraph (a), the kind, type or category of contract identified as a health policy in the regulations, is subject to this Act and not the Medical Schemes Act .
(2B) Before regulat ions in terms of this Act are promulgated , the Minis ter must publish the draft regulat ions in the Government Gazette for public comment and submit the regulat ions to Par l iament , while it is in session, for parl iamentary scrutiny at least one month before their p romulga t ion . " .
A m e n d m e n t of Schedule 1 to Act 53 of 1998, as a m e n d e d by section 36 of Act 17 of 2003
53 . Schedule 1 to the Short-term Insurance Act , 1998, is hereby a m e n d e d — (a) by the substitution in paragraph 1 for the definition of "de r iva t i ve s " of the
following definition: " 'derivat ives ' m e a n s — (a) an option contract [as contemplated in the definition of "securi­
t ies" in sect ion 1 of the Stock E x c h a n g e s Control Act , 1985 (Act N o . 1 of 1985)];
(b) a futures contract [and an opt ion contract as defined in sect ion 1 of the Financial Markets Control Act , 1989 (Act N o . 55 of 1989)]; and
(c) a contract for differences;" ;
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(b) by the insertion in paragraph 1 after the definition of "der ivat ives" of the following definition:
" 'futures contract ' means a standardised contract the effect of which is tha t— (a) a person agrees to deliver to or receive from another person a certain
quantity of corporeal or incorporeal things before or on a future date at a pre-arranged price; or
C b) an amount of money will be paid to or received from another person before or on a future date according to whether the pre-arranged value or price of—
(i) an asset; (ii) an index as a means of indicator that reflects changes in the
value of one or more groups of shares or securities on one or more exchanges ;
(iii) currency; (iv) rate of interest; or (v) any other factor,
is higher or lower before or on that future date than the pre-arranged value or p r i ce ; " ;
(c) by the substitution in paragraph 1 for the definition of " m a r g i n " of the following definition:
" 'margin' , in relation to a stock exchange [referred to in i tem 16(5)(a)(aa) of the Table to this Schedule] outside the Republ ic , means the margin as defined in the regulat ions issued or approved by the appropriate authority of the country [state] in which the stock exchange is situated or which is required by that stock e x c h a n g e ; " ;
(d) by the substitution in paragraph 1 for the definition of " m a r g i n depos i t" of the following definition:
" 'margin deposit ' means a margin with S A F E X and a stock exchange [referred to in i tem 16(5)(a)(aa) of the Table to this Schedule ] outside the Repub l i c ; " ;
(e) by the substitution in paragraph 1 for the definition of "marg in wi th S A F E X " of the following definition:
" 'margin wi th S A F E X ' means the margin as defined in the rules of the South African Futures Exchange referred to in [section 17 of the Financial Marke t s Control Act , 1989] section 18 of the Securit ies Services Act, 2004 (Act N o . 36 of 2 0 0 4 ) ; " ;
(f) by the insertion in paragraph 1 after the definition of "n .e . s ." of the fol lowing definition:
" 'option contract ' means a standardised contract the effect of which is that a person acquires the op t ion— (a) to buy from or to sell to another person a certain quanti ty of
corporeal or incorporeal things before or on a future date at a pre-arranged price; or
(b) that an amount of money will be paid to or received from another person before or on a future date according to whether the pre-arranged value or price of— (aa) an asset; (bb) an index as a means of indicator that reflects changes in the
value of one or more groups of shares or securit ies on one or more exchanges ;
(cc) currency; (dd) rate of interest; or (ee) any other factor, is higher or lower before or on that future date than the pre-arranged value or p r i ce ; " ;
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(g) by the substitution in the Table for item 2 of the following i tem: *'2. A credit balance in an account with, or a deposi t , including a
negotiable deposit and a bill accepted by, or a promissory note issued by, an institution [finally] registered under the Banks Act . 1990 (Act No . 94 of 1990), or the Mutual Banks Act , 1993 (Act N o . 124 of 1993) . " ;
(h) by the substitution in the Table for item 7 of the following i tem: "7. Securit ies issued by, and loans made to, the Local Authori t ies Loans
Fund Board under the repealed Local Authori t ies Loans Fund Act . 1984 (Act No. 67 of 1984) ." ; and
(i) by the substitution in the Table for item 17 of the following i tem: "17. [Units] Participatory interests in a [unit trust] col lect ive invest­
ment scheme registered in terms of the [Unit Trusts Control Act , 1981 (Act No. 54 of 1981)] Collective Investment Schemes Control Act . 2002 (Act No. 45 of 2 0 0 2 ) . " .
A m e n d m e n t of Schedule 2 to Act 53 of 1998, as a m e n d e d by sect ion 37 of Act 17 of 2003
54 . Schedule 2 to the Short- term Insurance Act, 1998, is hereby a m e n d e d — (a) by the substitution for paragraph 2 in Part I of the following paragraph:
"Calculat ion of values
2 . The value o f [ — (a) a Krugerrand coin referred to in i tem 1, shall be the price which
the South African Reserve B a n k is prepared to pay for it on the date as at which its value is calculated;
(b) a credit balance , deposit or marg in deposit referred to in i tems 2, 3 ,10 ,16(5 ) (b ) and (d) and 18, shall be the a m o u n t thereof;
(c) an asset referred to in i tem 4 , 5 , 6 , 7 , 8 , 9 , 1 0 , 1 1 , 1 2 , 1 3 or 16(1), (2), (3), (4) or (5)(a) or (c) which is l isted o n a stock exchange and for which a closing price was quoted on that stock exchange on the date as at which the value is de termined , shall be the c los ing price or the closing price last so quoted;
(d) an asset referred to in i tems 16(5)(c) and 17, shall be the price at which the unit would have been repurchased by the unit trust m a n a g e m e n t c o m p a n y on the date as at which the value is calculated, and in the case of a property unit trust, the marke t value, and if it is listed on a stock exchange and for which a closing price was quoted on that stock exchange on the date as at which the value is determined, the closing price, or the closing price last so quoted;
(e) a futures contract referred to in i tems 16(5)(d) and 18, shall be determined by the mark- to-market as defined in the rules of the South African Futures Exchange referred to in sect ion 17 of the Financial Marke t s Control Act , 1989 (Act N o . 55 of 1989);
(f) an opt ion contract referred to in i tems 16(5)(d) and 18 for wh ich a price was quoted on a stock exchange on the date on which the value is calculated, shall be that quoted price;
(g) an asset referred to in item 2 1 , shall be the a m o u n t of p r e m i u m s l e s s —
(i) the a m o u n t or es t imated a m o u n t of any commiss ion which the short- term insurer owes or for which it is l ikely to become liable in connect ion with the p r e m i u m s ;
(ii) a provis ion of 7,5 per cent of that a m o u n t , to cover the risk of loss arising from non-receipt by the insurer of any premiums;
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(h) an asset referred to in item 1 4 , 1 5 , 1 9 or 20(b) or (c), or an asset not otherwise specified in this paragraph , shall be an a m o u n t not exceeding that which could have been obta ined o n the sale of the asset between a wil l ing seller a n d a wil l ing buyer, act ing at arm's length and in good faith, as es t imated by the insurer;
(i) an asset referred to in item 20(a) , shall be the a m o u n t wh ich wou ld be payable to the pol icyholder u p o n the full surrender of the policy on the day on which the value is calculated;
(j) a derivative not ment ioned in s u b p a r a g r a p h (e) or (f) shall be calculated as determined by the Registrar from t ime to t ime.]
assets, liabilities and capital adequacy requirement shall be deemed to have been calculated in terms of this Schedule it" the requirements set out in this Schedule and the requirements prescr ibed by the Registrar have been compl ied with in making the ca lcu la t ions ." ;
(b) by the substitution for paragraph 3 in Part I of the following paragraph:
' [Savings] Registrar may reject certain values
3 . [(1)] Notwi ths tanding [paragraphs 1 and] paragraph 2, if the Registrar is not satisfied that the value of an asset, a liability or capital requi rement[ , when] calculated in [accordance wi th paragraph 2, does not reflect] terms of this Schedule reflects a proper value the Registrar m a y — (a) direct the insurer to appoint another person, at the cost of the insurer,
to place a proper value on that asset or liability or capital requi rement ; or
(b) [the Registrar m a y ] direct the short- term insurer to calculate the value in another manner which the Registrar de termines and which will produce a proper value [for that asset] .
[(2) A n asset in respect of which no basis of valuation is prescr ibed in paragraphs 1 and 2 shall be valued in accordance wi th General ly Accepted Account ing Pract ice ]";
(c) by the deletion of paragraphs 4 , 5 and 6 in Part II; and (d) by the substitution for subparagraph (1) of paragraph 7 in Part II of the
following subparagraph: " (1) For the purposes of section 29 , the value of the liabilities of a
short- term insurer, other than those prescribed by the Registrar and referred to in [paragraphs 5 and 6] paragraph 2, shall be de te rmined in accordance with [General ly Accepted Account ing Pract ice] financial report ing standards applicable to widely-held c o m p a n i e s . " .
A m e n d m e n t of Schedule 3 to Act 53 of 1998 as a m e n d e d by section 38 of Act 17 of 2003
55. Schedule 3 to the Short- term Insurance Act , 1998, is hereby a m e n d e d — (a) by the substitution for paragraph 4 of the following paragraph:
"Amount of security
4. [(1)] The value of the m i n i m u m amount of the security to be provided by or on behalf of a L loyd ' s underwri ter shall be deemed to have been calculated in terms of this Schedule if the requirements set out in this Schedule and the requirements prescribed by the Registrar have been compl ied with in making the calculat ions, [is a n a m o u n t equivalent t o — (a) the es t imated a m o u n t payable by the underwri ter in respect of
c la ims which have been incurred u n d e r South African short - term insurance policies and reported but not yet paid; less
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(b) an a l lowance in respect of re insurance cover held, which al low­ ance shall be a percentage of the a m o u n t contemplated in i tem (a), calculated by the f o r m u l a —
A-B x 100 A
in which f o r m u l a — A represents the p r e m i u m income received by all L loyd's
underwri ters under all short - term insurance policies under­ written by t h e m less brokerage and commiss ion; and
B represents the a m o u n t of A less all p r e m i u m s paid for re insurance cover he ld by those underwri ters ,
dur ing , in the case of both A and B, the latest ca lendar year pr ior to the calculat ion as reported in the most recent publ i shed Global Results of Lloyd's avai lable at the t ime a n d approved by the Registrar; plus
(c) a provis ion for c la ims incurred but not yet reported equal to 7 % of the total net a m o u n t of the p r e m i u m s u n d e r South Afr ican short - term insurance policies received by or on behalf of the underwri ter at Lloyd's Policy S igning Office dur ing the year ended on the last day of the quarter concerned.
(2) F o r the purpose of i tem (c) of s u b p a r a g r a p h (1) 'net a m o u n t ' means the net a m o u n t after deduct ion of the aggregate of— (a) the same percentage of such total p r e m i u m s as the percentage
contemplated in i tem (b) of subparagraph (1) , in respect of re insurance cover held;
(b) the aggregate of the refunds m a d e by or on behalf of the underwri ter dur ing the year in respect of p r e m i u m s under South African short - term insurance policies;
(c) brokerage and commiss ions in respect of the p r e m i u m s con­ cerned; and
(d) any tax payable on the p r e m i u m s concerned , o ther than taxes payable on net income:
Provided that only p r e m i u m s received and refunds m a d e on or after the date of c o m m e n c e m e n t of sect ion 60 shall be taken into account for that purpose . ]" ;
(b) by the substitution in paragraph 6 for subparagraph (2) of the following subparagraph:
" (2) Subject to section 63(6), the aggregate value of the assets referred to in subparagraph (1) shall, in respect of each particular kind or category specified by regulat ion, when expressed as a percentage of the aggregate min imum amount required to be held in the trust at that t ime in accordance with this Schedule [2], not exceed the percentage specified by regulation in relation to that kind or category of asse t . " ; and
(c) by the substitution in paragraph 6 for subparagraph (4) of the fol lowing subparagraph:
" (4) For the purposes of paragraph 5 and subparagraphs (1) and (2) assets shall be [valued in accordance with] deemed to have been calculated in terms of this Schedule [3] if the requirements set out in this Schedule and the requi rements prescribed by the Registrar have been compl ied with in making the ca lcu la t ions ." .
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A m e n d m e n t of A r r a n g e m e n t of Sections of Act 5 3 of 1998, as a m e n d e d by section 24 of Act 17 of 2003
56. The Arrangement of Sections of the Short-term Insurance Act. 1998, is hereby a m e n d e d —
(a) by the insertion after item 19 of the following i tem: "19A. Statutory ac tua ry" ;
(b) by the substitution for the heading of item 20 of the fol lowing heading: "Appo in tmen t of auditor or statutory actuary by Reg i s t r a r " ;
(c) by the substitution in Part VII for item 48 of the following i tem: "48. [ Intermediaries: remunerat ion and binder agreements ] Inde­
pendent intermediaries: r emunera t ion" ; and (d) by the insertion in Part VI I after item 48 of the fol lowing item:
"48A. Binder ag reemen t s " .
Short title and c o m m e n c e m e n t
57. (1) This Act is called the Insurance Laws Amendmen t Act , 2008 . and lakes effect on a date determined by the Minister by notice in the Gazette,
(2) Different dates may in terms of subsection (1) be de te rmined for different provisions of this Act .