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Consumer Affairs
Tuesday, August 1, 2000
Under statute

A proposed new structure whereby the short-term insurance ombudsman will no longer report directly to the industry has been developed and accepted by members of the South African Insurance Association (SAIA), according to Barry Scott, the association’s chief executive.

“A steering committee, comprising representatives from insurers and intermediaries will now be formed to oversee the conversion of the existing office,” he says.
In terms of the conversion, the office of the ombudsman for the short-term insurance industry will be restructured as a Section 21 (not for profit company).
“Other elements of the proposal are that members of this company will be insurance companies and possibly brokers, subscribing to the office. No company will be able to participate in the office without becoming a member. This will ensure that the decisions of the ombudsman are binding on all participants in the scheme.”
A two-tier management structure, comprising a Board and a Council, is envisaged. The Board will have a limited function, mostly statutory, while the ombudsman will report to the Council, which will include representatives of consumer groups, the industry and the regulatory authority.
“From consultative papers produced by the Financial Service Board (FSB) during 1999, it was clear that it was no longer acceptable to have an ombudsman directly reporting to an industry in the financial services sectors,” explains Mr Scott. “Instead, the office of the ombudsman will become statutory functions under the control of regulatory authorities.”
However, the FSB has recognised the value of the voluntary ombudsmen currently in place. “Therefore, where there is an effective voluntary system, it is likely that the legislation will allow exemption from the statutory offices for those organisations that subscribe to the voluntary system.”
Recognising this, the Board of SAIA developed and had this proposal approved for implementation.
 

Copyright © Insurance Times and Investments® Vol:13.7 1st August, 2000
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