The recent changes to the Regulations and PPR have given rise to the need for changes to be made to the Intermediary Service Agreements (ISA) between insurers and independent intermediaries. In fact the changes are so extensive that most insurers are likely to redesign their standard agreements and re-contract with intermediaries. Some have already started this process.
Apart from being a significant logistical exercise for insurers, intermediaries are likely to be bombarded with requests from various insurers, which will no doubt have a multiplying factor for intermediaries. In addition, whilst the legislative principles are the same, individual insurers are likely to derive their list of matters to be covered and their own interpretations let alone their own contracting format and style.
To help facilitate the process the FIA has prepared the attached checklist of content to be included in the refreshed ISA’s together with some high-level guidelines. We suggest these are used by members when presented with new agreements by insurers in order to cross check inclusion and broad terms. Reference should also be made to the list of Intermediary services that constitute the core intermediary functions. These are drawn from the intermediary activity segmentation the FIA has provided to the FSCA for the current activity segmentation analysis engagement across the industry.
A copy of the checklist has been sent by the FIA to insurers to create an awareness of what FIA members will expect when reviewing insurer agreements. We have asked that should any insurer have substantial problems with the checklist they should approach us centrally with a view to clearing differences.
The amount and level of detail of the content in the checklist alone is daunting and some agreements that we’ve seen run into 40 or so pages. As a quick reference we suggest you run through the Section Headings in column C to get an idea of the required content. Columns A-B show the regulatory reference and brief requirement and Column D provides guidelines. We suggest that the more detailed review is performed by the person responsible for your general legal and compliance work who should find the detail informative and helpful.
The checklist has been prepared in good faith in line with the FIA’s understanding of the new requirements. We have also cross-checked against the drafts of a number of insurers and are confident the list is fair and representative of the new requirements. Please address any queries or suggestions on how the document could be improved to peter@FIA.co.za.
(Naturally the FIA does not have sufficient manpower to undertake the task of scrutinising all contracts but if members come across any terms or conditions which appear to be grossly unfair or unreasonable and not in the interests of good governance these should be sent through for possible engagement with the insurer(s)).
Please also view:
Annexure A: Intermediary agreement checklist framework and guidelines, and
Annexure B: Intermediary services activity guidelines.
We hope that this will facilitate and ease the contracting process that needs to be completed before 15 December 2018.