New SAIA Code of Conduct: Impact beyond insurers

The SAIA Code of Conduct, launched to SAIA members on 16 March 2010, will not only affect the activities of insurers, but also those of their associates who are contracted to perform duties on behalf of the insurers who are members of the SAIA.

The purpose of the new SAIA Code of Conduct includes “to regulate the services offered on behalf of SAIA members by their associates”. This does not mean that the Code attempts to regulate any entities other than SAIA members, but only the services other entities are contracted to do on behalf of a SAIA member.

Who is an associate?

The definition of ‘associate’ used in the SAIA Code clarifies this even more. This definition reads: “any individual and/or business appointed by or contracted to an insurer to represent the insurer in any matter relating to short-term insurance business, as well as any sub-contractors of such individuals and/or businesses contracted or appointed to render services ultimately on behalf of the insurer.”

Such associates include intermediaries contracted to fulfil any non-independent intermediary services on behalf of the insurer, for example, administration agents; assessors; claims managers; collection agents; investigators; loss adjusters; service providers such as builders, plumbers, panelbeaters, tow truckers, and others; and underwriting managers. This excludes advice given by independent intermediaries when such intermediaries were appointed to represent the customer.

Obligations imposed by the Code

The SAIA Code of Conduct obliges SAIA members to observe and comply with the Code, and to confirm compliance annually. In order to foster support for the Code as well as actively promote widespread awareness of its principles, ethical practices and obligations, SAIA members are expected to ensure that their employees as well as their associates are familiar with the Code, its requirements and the insurers’ commitment to the Code.

Furthermore, the Code states that SAIA members will have the responsibility to comply with the following relevant guidelines, amongst others:

• Put appropriate procedures and systems in place to comply with the Code including training of staff and contracted associates, monitor compliance with the Code, report on compliance with the Code, and any other required action in this regard; and
• Accept that they will not be in compliance with this Code if their employees and/or contracted associates fail to comply with this Code when acting on their behalf.

Professional standards

In terms of professional standards, addressed in section 6 of the SAIA Code of Conduct, the following clauses are relevant.

6.1 Short-term insurers enter into contractual relations with third party suppliers that provide them with services, which should be properly documented in agreements. In such cases, insurers are in essence transferring obligations to their associates. The following standards therefore apply to the employees of insurers as well as to the associates.

6.2 The SAIA members, their employees and associates are required to:
• Conduct their services in an honest, fair and transparent manner;
• Only perform functions that match their expertise;
• Ensure that all staff receives adequate training to enable them to carry out their functions competently.

6.5 SAIA members, their employees and associates must have and maintain:
• All licences, registrations and approvals required by law; and
• Membership of a relevant and recognised professional body, or otherwise be able to demonstrate sufficient expertise, where appropriate.

6.6 Associates must be informed of the standards in the Code and be required to comply with these standards while acting on behalf of the insurer. The insurer must have a mechanism to assess, monitor and rectify the performance of the associate. If the performance of the associate fails to respond satisfactorily to the corrective measures, the services of the associate should be terminated.

6.7 Associates must be required to inform insurers of a complaint against them while acting on behalf of the insurer. The insurer will keep a record of relevant complaints in order to monitor and ensure compliance with the Code.

6.8 Associates are required to inform customers of the services they have been asked to provide and the identity of the insurer for whom they are acting.

6.9 The insurer is to deal with complaints received by customers relating to associates in terms of its own complaints handling procedures.

Other relevant sections

Because the SAIA Code of Conduct not only sets guidelines for SAIA members, but also for the actions of their contracted associates, most of the further sections in the Code are also relevant, including , and especially, section 9 (Insurance sales and policy maintenance), section 10 (Insurance claims), and section 11 (Fraud and improper conduct).

The Financial Intermediaries Association (FIA), as well as other relevant parties, participated quite actively in the process of drafting a new Code. The FIA’s proposed new Code was reportedly also aligned with the SAIA Code, amongst others, in general terms.

The SAIA Code of Practice came into force on 16 March 2010, and will be revised after the first year in order to address issues that may arise during the first year of implementation.

The full SAIA Code of Conduct is available on the SAIA website on www.saia.co.za.