One of the key pieces of legislation that the Financial Sector Conduct Authority (FSCA) announced during 2018 was the impending implementation of a new set of the Policyholder Protection Rules (PPR). The new PPR will have a significant impact on group risk policies. The changes that the revised PPR will bring was discussed at the 2018 Alexander Forbes Hot Topics Seminar where Vickie Lange, Head of Institutional Best Practice at Alexander Forbes Investments, spelled out what insurers can look forward to.
Lange pointed out that in order to communicate meaningfully with policyholders, insurers would require certain information about those policyholders from retirement funds or employers.
“At the very least, this information should include the policyholder’s name, identity number, and their contact details which would include email addresses, and cell phone numbers when they are available. This information is personal in nature and is subject to the Protection of Personal Information Act (POPIA). In this regard, the new PPRs require an insurer to have an effective data management framework in place,” said Lange.
She added that where the personal information of members is assigned to third parties, it would be the insurer’s responsibility to conduct due diligence on those third parties to ensure compliance with its (the insurers) data protection responsibility.
Walk the line
If anything, the revised PPRs will ensure that insurers walk a very specific line that will be dictated by the FSCA.
“The data protection management framework envisaged in the new PPRs should include appropriate strategies, policies, systems, processes and controls relating to the processing of personal information of policyholders. Schedules are currently provided to insurers on a monthly basis to ensure that the current levels of cover are in place. At the moment, these do not extend to the level of information that is set out by legislation,” said Lange who added that insurers are already in the process of requesting the relevant additional information from policyholders.
The data framework also deals with the transfer of data between the various parties that are involved in the process. All parties must abide by the rules set out by POPIA. “the PPR will allow an insurer to make direct contact with policyholders, but only if the communication is about the group risk offering that they insure,” said Lange.
She added that in terms of POPIA, insurers may not use the data for any other purpose other than the purposes stipulated in the agreement entered into with the retirement fund or the employer.
The above rules have prompted reviews of insurers data frameworks to also help with the reporting requirements to the FSCA.
The claims management spotlight
The claims management process of group risk policies will be placed under the spotlight with the new PPRs.
“The PPR rules will require an insurer to establish, maintain and operate an adequate and effective claims management framework to ensure the fair treatment of policyholders and claimants. Once established, the claims management framework must be regularly reviewed. The insurers board of directors must allocate the responsibilities of handling claims adequately trained and experienced employees,” said Lange.
The insurer then needs to establish an internal process of claims decisions escalation and review. If an insurer has made a decision to accept, repudiate or dispute a claim or its quantum, the insurer must notify the claimant within ten days.
“Where a claimant makes further submissions in line with an insurer’s claims escalation or review process, an insurer has up to 45 days to make a decision and to communicate its decision to the claimant. Where a claimant fails to institute legal action against an insurer for a period of three years, prescription applies,” said Lange.
Once a claim has been instituted, an insurer is required to communicate with claimants and policyholders. In addition, an insurer must put appropriate reporting processes in place to ensure compliance with any prescribed requirements for reporting client’s information.
The bottom line
The above stipulations may seem as if the FSCA is once again placing a heavy administrative burden on insurers. And this may very well be the case. However, we need to look at the big picture.
The FSCA may be pedantic about certain issues, but it is being done with the ultimate goal of creating an industry that is beneficial to clients. If insurers follow the new PPR properly, they will be placing the client at the heart of their business.
Clients have always been at the heart of insurance, but this always meant different things to different companies, and that is where the problem originated. This is why the FSCA is being pedantic.
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This article was published courtesy of FANews