SECTION: 3

Short-term Insurance Act, 53 of 1998

TABLE OF CONTENTS

Content Page

Section 3 Short-term Insurance Act, 53 of 1998 19

Overview 21

Assisting the Learners with this Section 22

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Learning Outcome The following is the Learning Outcome of this Section:

3. Examine Critical Sections of the Short-term Insurance Act, 53 of 1998.

Learning The Learning Objectives are as follows: Objectives On completion of this Section, the Learner must be able to:

3. Examine critical Sections of the Short-term Insurance Act, 53 of 1998 by:

 Realising the purpose and nature of the Act

 Conceptualising the capacity to conclude a Short-term Insurance Contract

 Having insight into the sound business practices for Short- term Insurance

 Comprehending Policyholder Protection Rules

 Conceptualising Special Short-term Risk Insurance

Assessment To demonstrate the achievement of the Learning Objectives, Learners are Criteria required to meet the criteria and/or provide the following evidence:

Realising the purpose and nature of the Act  Describe the purpose of the Act  Define a Short-term Policy

Conceptualising the capacity to conclude a Short-term Insurance Contract  Describe the capacity to conclude a Short-term Insurance Policy

Having insight into the sound business practices for Short-term Insurance  Explain Section 43 of the Act  Identify business practices covered in the Act

Comprehending Policyholder Protection Rules  Describe the purpose of the Policyholder Protection Rules

Conceptualising Special Short-term Risk Insurance  Describe the purpose of SASRIA  Identify what is covered and not covered under SASRIA

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3.1 Assisting the Learners with this Section

Overview of the This Section introduces the Learner to the Short-term Insurance Act, 53 of main concepts of 1998 and the critical Sections pertaining to the credit environment within THE this Section BANK.

Short-term Insurance covers you against loss of your personal assets as well as insures you against potential liability. In other words, with Short- term Insurance you are Insured against natural disasters, for example fire, and storms, as well as against theft and your own negligence.

Summary of key Below is a summary of the key learning points of this Section. learning points  Short-term Insurance covers you against loss of your personal assets as well as insures you against potential liability. In other words, with Short-term Insurance you are Insured against natural disasters, for example fire, and storms, as well as against theft and your own negligence

 The Short-term Insurance Acts attempts to protect the consumer against dishonest intermediaries

 The purpose of the Act is to enable the consumer to make informed decisions regarding Short-term Insurance products

 Section 1 of the Act deals with the appointment of a Registrar of Short-term Insurance

 Part 2 deals with the registration of Short-term Insurers

 Part 3-6 deals with the business and administration of Short-term Insurers

 Part 7 deals with sound business practices, Policies and Policyholder Protection

 Part 8 deals with all the provisions regarding Lloyd’s underwriters and claims against them, as well as all other provisions of the Act relating to Lloyd’s

 Part 9 deals with the offences of Short-term Insurers and other persons and the subsequent penalties and fines that can be given to an Insurer

 Part 10 deals with registration of Short-term Insurers before commencement of this act, the separation of the Short- and Long- term Insurance business and other general provisions

 A minor, who is 18 years of age, may, without the consent of a Guardian, enter into a Short-term Insurance Policy

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Summary, continued  Any Policy benefits must be paid to the minor. He/she may deal with the money as he/she sees fit, without the consent of a Guardian

 Section 43 of the Act provides that the customer is free to choose whether to cede an existing Policy or take out a new Policy. The customer must be notified of his/her free choice in writing

 Several Policyholder protection rules were instituted to ensure that Short-term business is conducted according to sound Insurance principles and practice and in the interest of the insuring public

 All intermediaries must disclosure a summary of these rules to the consumer before any new or additional Contract is entered into

 The Short-term Insurance Ombud investigates complaints from the public against Short-term Insurers that are members of the Ombud for Short-term Insurance Association

 SASRIA (South African Special Risk Insurance Association) was established and registered during February 1979

 SASRIA was established to insure incidents of political riot

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Content covered in The following is covered in this Section of the Learner Guide. Included is a list the Learner Guide of topics as well as the page numbers relevant to the Learner Guide.

TABLE OF CONTENT

Content Page

Outline of the Learning Outcomes and Objectives 56 covered in this Section

Purpose and nature of the Act 57  Introduction 57  Purpose of the Act 57  Contents of the Act 58  Section1 – Definitions 60  Definition of a Short-term Policy 60  Part 1 Administration of the Act 63  Part 2 – Registration of Short-term Insurers 63  Part 3-6 – Business and administration of Short-term 63 Insurers  Part 7 – Business practice, Policies and Policyholder 63 Protection  Part 8 – Provisions relating to Lloyds 63  Part 9 – Offences and penalties 63  Part 10 – Transitional and general provisions 63

Capacity to conclude an Insurance Contract 64  Introduction 64  Minors 64

Sound business practices 66  Introduction 66  Free choice by customer 66-68  Business practices 69-70

Policyholder protection rules 71  Introduction 71  Purpose of the rules 71  Important features of the rules 71  Principles for disclosure 72

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Content covered in the Learner Guide, TABLE OF CONTENT continued Content Page

Special Short-term risk Insurance 73  Introduction 73  History of SASRIA 73  What is covered by SASRIA 73  What is not covered by SASRIA 74

Summary 76

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Activities covered in The following activities are covered in this Section of the Learner Guide. the Learner Guide

Page Activity

60- Activity: The Learner needs to find the definition of a Short-term Policy 62 and describe in his/her own words the meaning of each of the following Policies: Engineering Policy, Guarantee Policy, Liability Policy, Miscellaneous Policy, Motor Policy, Accident and Health Policy, Property Policy and Transportation Policy. Check the Learner’s understanding/ interpretation of each of these.

65 Activity: The Learner needs to investigate if the Bank can accept a Short-term Policy of a minor as security.

68 Activity: Self-explanatory. The Learner must explain the provisions of Section 43 on the Bank. Refer the Learner to the Security Manual for information.

70 Activity: The Learner needs to form a small study group with a fellow Learner/Learners and discuss the sound business practices between themselves. Assist the Learners with any uncertainties and/or concerns.

74 Activity: The Learner needs to discuss SASRIA Insurance with an Insurance Consultant and note his/her conclusions.

75 Activity: The Learner needs to complete the crossword. Across: 5. Policy benefits 6. Free choice 7. Riot 8. Eighteen 9. Government 10. Looting 11. Ombud

Down: 1. Disclosures 2. SASRIA 3. Receipt 4. Financial Services Board 5. Policyholder Protection Rules

77 Activity: Self-explanatory. The Learner needs to note additional learning points or draw a mind-map of the learning points in the space provided.

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Activities covered in the Learner Guide, Page Activity continued

49 Activity: Self-explanatory. The Learner needs to note additional learning points or draw a mind-map of the learning points in the space provided.

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