INTRODUCTION

1
INTRODUCTION It is unwise to pay too much,
but its worse to pay too little. When you pay
too much you lose a little money - that is all.
When you pay too little, you sometimes lose
everything, because the thing you bought was
incapable of doing the thing it was bought to do.
The common law of business balance prohibits
paying a little and getting a lot - it cannot be
done. If you deal with the lowest bidder, it is
well to add something for the risk you run. And
if you do that you will have enough to pay for
something better.John Ruskin
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BACKGROUND

• Origins of the assistance policy
• Characteristics of the assistance policy
• Low premiums
• Low sums assured
• Cash premium collections
• Limited medical underwriting
• Voluntary Group Schemes

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NATURE OF THE CONTRACT OF INSURANCE

• A contract of insurance must contain the
  following essential terms
• a term that the premium will be paid or a term
  making the contract dependant on the premium
  being paid by the insured
• a term that the insurer will compensate the
  insured for either a patrimonial or
  non-patrimonial loss by payment of a benefit sum
  of money or equivalent by the insurer
• a term that the insurers obligation is dependant
  on the occurrence of uncertain event
• an insurable interest on the part of the insured

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REGULATORY ENVIRONMENT

• Registration and Authorisation
• Deemed Insurers
• Obtaining Information
• Long-Term Insurance Act
• Inspection of Financial Institutions Act
• Financial Institutions (Protection of Funds) Act
• FAIS
• FIC
• Permissible actions for contravention of the
  Long-Term Insurance Act

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MARKET PARTICIPANTS

• Underwriters
• Administrators
• Intermediaries and Representatives
• Consumers
• Undertakers

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MARKET PROBLEMS

• Benefits not available in cash
• Beneficiary nominations lacking
• The Extent of Underwriting -
• Over insurance
• Double insurance
• Under insurance
• Part insurance
• Premiums
• Nature and Extent of Cover
• Lack of Insurable Interest
• Policyholder contact details

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MARKET PROBLEMS (continued)

• Continued Premium Payments
• Lack of Consistency in Documentation
• The Pre-paid Funeral
• Replacement Policies
• Commission Regulation
• Income Tax and Vat Issues

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CONSUMER EDUCATION

• Basis
• FSB Act
• Responsible parties
• LOA
• FSB
• Problems
• Literacy
• Perception
• Medium
• Understanding of the market by the FSB / LOA

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WHY IS THIS RELEVANT?

• Death is inevitable
• Funeral expenses inevitable / increasing
• Payment
• Policy / Fund
• Loan / Credit
• Family collection
• No money, no funeral - Will the State pay?
• Pauper funerals

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RISKS

• Increasing mortality
• Failure of registered insurers
• Cessation of business by unregistered insurers
• Continuing increase in funeral expenses
• Financial soundness / solvency of unregistered
  insurers
• Increased state contributions for funeral
  expenses?

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SUGGESTIONS

• FSB must visibly enforce what it has
• Re-focus consumer education
• Focus initially on civil not criminal remedies
• Dedicate / budget appropriate resources
• Training of FSB inspectors and staff
• Conduct inspections
• Consider
• Premium Setting
• Standard contract terms
• Involve Metropolitan Councils and SARS and
  Consumer Affairs

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CONCLUSION

• Quote
• A mans dying is more the survivors affair than
  his own
• Thomas Mann
• (1875 - 1955)

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INTRODUCTION

• It is unwise to pay too much, but its worse to
  pay too little. When you pay too much you lose a
  little money - that is all. When you pay too
  little, you sometimes lose everything, because
  the thing you bought was incapable of doing the
  thing it was bought to do. The common law of
  business balance prohibits paying a little and
  getting a lot - it cannot be done. If you deal
  with the lowest bidder, it is well to add
  something for the risk you run. And if you do
  that you will have enough to pay for something
  better.John Ruskin