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Sunday, June 1, 2008
SAIA comment…..

“Just as we thought that the long awaited Second Hand Goods Bill had been shelved and forgotten about,” remarks the SA Insurance Association, “It has suddenly been introduced to Parliament and referred to the Portfolio Committee on Safety and Security for consideration and public hearings.”
Briefly, the Bill was first published in October 2005 and aims, once enacted, to regulate the business of dealers in second hand goods and pawnbrokers, in order to limit trade in stolen goods, to promote ethical standards in the second hand goods trade and lastly provide matters connected therewith.  
In insurance business, loss or material damage over movable property more often than not involves the replacement of second hand goods: motor vehicles, motor cycles, jewellery, communication equipment, household and office equipment and the like. In certain circumstances, says the SAIA, insurers and brokers acting with mandate may sell or dispose of salvage (recovered goods) to offset claims. 
If enacted, the Bill will replace the Second Hand Goods Act of 1955 that the short-term insurance industry had for some time managed to escape, because the Act refers to any person who “deals in” second hand goods, in the course of business.
The proposed new Bill, however, will apply to any person who carries on a business as a dealer of second hand goods. The Bill will, however, not apply in instances where goods are disposed of by way of public auctions, authorised warrant of execution under judgment, or court order, or to any dealer who is a member of an accredited association save where exempted by notice in Gazette by the Minister.
A dealer is defined as any person who carries on a business of dealing in second hand goods. The subrogation clause in the now withdrawn Multimark III and some personal lines wording provides that the insurer or any person authorised by it may take, enter or keep possession of any damaged property and deal with it in any reasonable manner. 
At a glance, when reading the definition of a dealer one will agree that it appears that insurers are excluded from the application of the Bill by reason that insurers are, indeed, not in a business of acquiring or disposing second hand goods. However, comments the SAIA, the definitions of “deal in” and “disposing of” are very broad and include acquiring and disposing of by any means of goods. To this end, the definition of a dealer, as contained in the Bill, might extend beyond the scope of the original objective of the Bill so far as insurers are concerned.
The Bill does not draw a distinction between “deal in” and “deal with”, hence the definition of “dealer” should be made clear; that the Bill is intended for persons whose main/core business is dealing in second hand goods and not persons who incidentally, through their business, may come into possession of and dispose of second hand goods.   
Of importance when interpreting whether or not the Bill is applicable to the short-term industry, is the consideration that insurers, in certain instances, do assume ownership of the goods they acquired before disposing them.
Notwithstanding that insurers do contract with salvage companies who dispose of goods on their behalf insurers should ensure that dealers do comply with the provisions of the Act, once passed, by for instance registering and reporting to the police on stolen goods.
For further information please contact Oupa Skosana at the SA Insurance Association, or email to: oupa@saia.co.za

Copyright © Insurance Times and Investments® Vol:21.5 1st June, 2008
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