The Registrar of Long-term Insurance said on Wednesday it has referred a case against insurer Assupol Life to the enforcement committee of the Financial Services Board (FSB).
The FSB said in a statement that Assupol remunerated its independent intermediaries by way of permitting them to share in underwriting profits during the period August 2014 to June 2016, in contravention of section 49 of the Long-term Insurance Act.
Also, the FSB alleged that during the period June 2012 until July 2015, Assupol contravened Rule 16.1 of the Policyholder Protection Rules issued under the Act by rejecting claims without advising policyholders in its notice of rejection of their rights as stipulated.
In particular, Assupol failed to inform its policyholders of their right to lodge a complaint under the Financial Services Ombud Schemes Act, and the time limitation for the institution of legal proceedings.
The FSB said the Registrar also considered, amongst other factors, that Assupol failed to exercise proper oversight over its outsourced functions and that its failure to comply with the PPRs had the potential of causing prejudice to the policyholders whose claims were rejected.
In mitigation the Registrar took into account, amongst other factors, that Assupol admitted the contravention, co-operated with the investigation and the subsequent enforcement action.
Assupol also undertook to implement measures to prevent similar contraventions from recurring and to address the oversight problems.
Consequently, the Registrar agreed to a penalty of R500,000, which penalty was imposed by the Enforcement Committee on Assupol last week.