What you need to know about RE Level 2
02 April 2012
Charmaine Koch, The Insurance Institute of South Africa
There is great confusion around both the intention and content of the Level 2 Regulatory Examinations (RE). To date we know that all representatives will be affected by these exams in some way. What is unclear is how?
The decision to implement RE’s followed lengthy consultation between the Financial Services Board (FSB) and various industry stakeholders. After the decision was taken the industry requested that the FSB publish the criteria for each of the exam categories.
As the FSB did not have the expertise to design all of the exam criteria it approached industry to participate by way of product category workgroups. These workgroups were tasked with designing and agreeing criteria to focus on what the FSB could regulate in each product category. The purpose of the workgroups was two-fold: First, to set the exams… And second, to consider qualifications (and whether qualifications submitted to the FSB were relevant to the industry).
The Intention
The FSB and their qualifications committee conceded that certain qualifications covered the regulatory exam criteria for some of the product categories. It was decided that any qualification covering at least 80% of a regulatory exam criteria would be marked as "S” for Specific. A person with said qualification would be exempted from having to complete the regulatory exam in question.
It was hoped that once the FSB published its criteria the training providers (or qualification designers) would amend their programmes and curricula to include 100% of the regulatory exam criteria for a particular product category.
The qualifications process was then amended, requiring anyone who sought a specific rating for a particular qualification to map the curriculum with the product category specific criteria. Upon successful application to the FSB this qualification would receive an "SP” specific rating, allowing ongoing exemptions from the particular regulatory exam. (All of the qualifications submitted and rated by the FSB are listed at www.fsb.co.za).
What does this mean?
Where representatives have obtained a qualification that is recognised by the Registrar as specific to a product category or categories, such representatives can be exempted from having to write the examinations for the product categories that the qualification has been recognised for. If the qualification includes and covers the qualifying criteria sufficiently there is no need for the candidate to complete an examination.
Such exemption can only apply if an individual has completed the qualification, and will not apply to those who have credits towards (or have partly completed) a qualification. An individual must have a completed qualification or write the relevant Level 2 RE.
Other qualifications
The FSB identified a number of qualifications that are relevant to the industry, such as Bachelor of Commerce (B Com) and other tertiary qualifications. Because these degrees do not cover any single insurance product category (per the regulatory criteria) they are given a generic status by the FSB.
The FSB requires individuals with generic degrees to complete the relevant Level 2 RE to allow them to perform their regulatory functions of giving advice or performing an intermediary service within the relevant product category.
The Short-Term Commercial Debate
In consultation with the industry, certain questions were posed before designing the criteria for Commercial Short Term Insurance, such as:
1. What are the common criteria covering representatives in an insurer, underwriter or broker?
2. Is it necessary to create separate exams for advice giving and intermediary services?
3. What would be common to all representatives irrespective of their area of specialization?
Based on the answers to the above the industry agreed to settle for a single Commercial Insurance exam with the proviso that it would be relevant to anyone required to sit it. It was further agreed that the only common denominator for this exam was the process of insurance, to which every regulated person is party!
The criteria for this exam centres on the insurance process from identifying the client’s needs to the insurers recovery and mitigation of losses, and not on the specific product, policy wording or its distinguishing features.