Insurance is more than just protecting your houses for sale in Pretoria (to use an example). In South Africa, the insurance industry is divided among 4 main players. The traditional group is the life insurance companies that are composed of policy holders and shareholders. The second players are the short term insurance business. They offer general insurance, special risk, motor vehicle accident fund, and even insurance against demonstrations and riots. The third players are companies that offer reinsurance and the fourth are the insurance brokers who work mainly with short-term insurance providers.
In the same manner, the industry is also self-regulated by several organizations that have been established to protect specific interests. For instance the Life Offices’ Association or LOA was established years ago to represent the interest of long term life insurance companies and consumers. The South African Reinsurance Offices Association or SAROA is run by reinsurance businesses and the insurance brokers have their association known as SAIBA while the short term insurance companies call their association SAIA. There is even a group for the adjusters known as ILA or Institute of Loss Adjusters.
Insurance in South Africa can be a little complicated because there are so many voices, a myriad of problems, and a citizenry that is slowing waking up to the need for insurance.
Life Insurance in South Africa
The government has placed significant measures to protect consumers from insurance fraud. There is an Insurance Act of 1943 which monitors assurers and insurance providers. There are also several laws like the Insolvency Act of 1936, the Estate Duty Act of 1955, the pension Funds Act of 1956, and the Stamp Duties Act of 1968, to name a few.
One of the highly respected associations in the insurance industry for both consumers and long terms insurance companies is the LOA. They are able to step in and decide objectively what needs to be done to resolve issues, educate South Africans, appease policyholders, and protect its member companies from abuse and over-regulation by the government.
The LOA has also created a formula to help its members make realistic projections for their products. This helps companies avoid getting blinded by high growth rates, a deceptive political peaceful lull, or sudden change in inflation rates. In fact, a member of the LOA that does not follow this formula on estimated maturity value may face a ban on selling insurance by the association.
With regards to disability insurance, the LOA has a standing agreement with its assurers. In short, the insurers and assurers cannot over-insure. They can only base their maximum disability benefit on earnings in the previous year. If a policyholder fails to state all benefits received in the previous year, the policy could be considered void.
Any dispute or compliant with the LOA will be addressed if the complaint is formally sent to their offices in Cape Town. However, if the decision made is still being contested, the Insurance Act can be used to find resolution through the Financial Services Board and Registrar of Financial Institution.