What constitutes a permissible inducement?
In the last task, sponsored by the FSB (Financial Services Board), the apprentices had to look at the legislative prohibition on inducements as set out in section 44 of the Short-term Insurance Act, 53 of 1998 (STIA) and section 45 of the Long-term Insurance Act, 52 of 1998 (LTIA).
Apprentices had to act as if they were employed by the FSB and were given two weeks to complete the task. The judges pulled no punches when they revealed that this would make or break their chances of being The Insurance Apprentice 2018.
This was an individual task and contestants realised they would have a tough time making a good impression on Caroline da Silva, Deputy Executive Officer of the FSB.
The task at hand
Apprentices had to look at some inducement practices in the industry - and there are many – and view them from the perspective of the principles set out in the articles and material handed to them, and then determine if there are other principles that the Registrar should consider when it comes to inducements in terms of delivering good outcomes for customers. For example, does the inducement distract the customer from fully applying her mind to the actual insurance product – or does the inducement encourage the policyholder to act in such a way that their benefits in terms of the policy are reduced, for example, do not claim even if you have a valid claim.
Additional principles
Put simply, the apprentices had to describe the inducement in a de-identified way and why they think it does or does not amount to an inducement, and whether in their views it would support or impede fair outcomes to customers. Most importantly, they had to make some recommendation as to any additional principles of their own that they thought the Registrar could consider when looking at inducements.
We would like to thank the FSB for sponsoring the seventh episode of The Insurance Apprentice 2018.
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The prize
The winner of The Insurance Apprentice 2018 will fly to London, in business class, for a week to visit Lloyds of London, sponsored Lloyds of London; the winner will also receive a bursary valued at R75 000 from INSETA and win a cash prize of R20 000 from Masifunde Training Centre. The Insurance Institute of South Africa (IISA) is also sponsoring the winner to go to the Insurance Conference at Sun City in July 2018.
