Chapter 1: SA General Insurance Market Flashcards
(8 cards)
Losses covered and those not covered under RAF
Covered Loss:
“bodily injuries”
“medical expenses (actual and future)”
“loss of income and reduced earning capacity”
“loss of support suffered by dependants” (in case of death)
“funeral expenses”
“general damages – the non-financial loss for pain, suffering, disfigurement and loss of amenities of life.”
Not Covered:
“liabilities which the driver or owner may incur for damage to property (e.g. damages to motor vehicles, personal affects, buildings, luggage or goods conveyed in a vehicle). Damage to third party property is commonly covered as part of an insured’s motor policy.” - It’s about bodily injury vs damage to property - property damage is for standard insurance policies
RAF claims prescription periods
Claims must be submitted to the RAF within three years of the accident. Claims where the negligent owner or driver is not known (e.g. in the** case of hit-and-run claims**) must be submitted within two years of the accident. If the matter is not settled, the claimant must issue a summons within 5 years of the accident.
Shortcomings in the current RAF compensation delivery system
- RAF has been under-funded for many years.
- Settlement costs (attorneys, actuaries, medical experts, etc.) are high.
- Settlement delays are long (typically 18 to 36 months).”
- Inconsistent and illogical claims settlement (Discretion and Legal Interpretation differences, subjectively in proving fault and apportioning the blame, uncertainty as to the liability settlement)
Railway Rolling Stock and Infrastructure Insurance
The “rail” policy type covers damage or loss resulting from the possession, use, or ownership of railway rolling stock or related infrastructure [1].
Some examples of what a rail policy might cover include:
Damage to railway cars [1]
Damage to locomotives [1]
Damage to railway tracks or other infrastructure [1]
Loss of revenue due to damage to or loss of use of rail infrastructure or rolling stock [2]
South African Insurance Authorization Requirements
To sell insurance or reinsurance in South Africa, an applicant must apply for authorization with the Financial Sector Conduct Authority (FSCA). The applicant must meet certain requirements before authorization is granted. These requirements include:
- **Minimum Capital Requirements
- A detailed reinsurance programme
- Auditors
- An organogram of company structure
- Proposed management
- A detailed business plan**
Insurance Act has additional requirements:
* demonstrate that its key persons and significant owners meet the prescribed fit and proper requirements
* have a sound business plan
* have adequate operational management capabilities to conduct the classes and sub-classes of insurance business that it wishes to conduct
Lloyd’s Syndicate Premium Trust Funds
A Premiums Trust Fund (PTF) is a fund that is used within a Lloyd’s syndicate and holds the running balance of premiums received, claims paid out, investment income received, and expenses paid out [1]. When claims payments are required, the managing agent pays them out of the PTFs [1].
Key aspects of a Premium Trust Fund (PTF) include:
The PTF is managed by the managing agent of the syndicate [1].
The PTF holds the premiums received by the syndicate [1].
The PTF is used to pay claims and expenses related to the syndicate [1].
The PTF includes investment income received by the syndicate [1].
Disadvantages of captive insurance
- Lack of Risk Transfer: There may be a lack of risk transfer (the only offset will be the use of reinsurance).
- Concentration of Risk: A captive may suffer from a concentration of risk.
- Lack of Know-How: There may be a lack of know-how when dealing with more complicated claims.
- May not insure third-party risks: Insurance Act specifies that a captive insurer may not insure third-party risks…. This means that a captive may only insure first-party risks
