Enquiry into consumer credit insurance practices concludes public hearings

A high powered panel of long- and short-term insurance experts has listened to over 20 hours of evidence on practices in the consumer credit insurance market and their impact on the consumer.

The panel of enquiry, chaired by Judge Peet Nienaber, recently retired Ombudsman for Long-term Insurance, was appointed by the Life Offices' Association (LOA) and the South African Insurance Association (SAIA) after a hard hitting media report earlier this year accusing a life company active in the consumer credit insurance market of engaging in undesirable practices.

The panel had requested written submissions from interested parties, including members of the public, during September. A total of four public hearings were then held this month, both in Johannesburg and Cape Town. The panel heard evidence from life insurers, short-term insurers, credit providers, a member of the public, both the LOA and SAIA, and the Ombudsmen for Long- and Short-term Insurance.

Representatives from National Treasury and the Financial Services Board (FSB) attended the hearings as observers.

Anna Rosenberg, LOA deputy executive in charge of legal and policy, says the main aim of the enquiry is to identify problem areas in the credit insurance market and to assist in eradicating undesirable practices with a view towards better consumer protection.

"Members of the panel as well as the observers were impressed with the level of co-operation they received from the LOA and SAIA member offices and commented on the quality of presentations made to the panel," says Rosenberg.

"The panel was particularly impressed with the degree of openness displayed by companies that testified at the hearings. All companies were prepared to give evidence in the public domain and only one part of a submission had to be heard in camera for strategic reasons as cited by the company concerned."

The members of the panel are Desmond Smith (director of companies), Ronnie Napier (former SAIA Chairman and senior partner of law firm Webber Wentzel Bowens), Louis Wessels (former head: legal and policy at the Financial Services Board) and Moses Moeletsi (Chairman of the Board of the Ombudsman for Short-term Insurance and a member of the Long-term Ombudsmans Council).

Refilwe Moletsane, deputy Chief Executive of the SAIA, says the hearings not only highlighted problem areas in the consumer credit insurance space, but also reminded of the benefits to the consumer.

"Whilst it is acknowledged that there are problems, credit insurance also protects consumers from the potential devastating effects that eventualities such as death, disability or theft may have on borrowers not protected by credit insurance."

She says the panel now needs to consider all the evidence heard and the written submissions received, before deciding on the next steps. The panel may call for further evidence and request responses to questionnaires if the need arises.

At the end of its deliberations, the panel will prepare a report on its findings and develop proposals on how best to address current short-comings to ensure greater consumer protection in this market.

The report will be made public and will also be submitted to National Treasury, the FSB, the Parliamentary Portfolio Committee on Finance and the National Credit Regulator (NCR) as well as to the boards of the LOA and the SAIA.