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TOPIC 1: THE LIFE INSURANCE INDUSTRY

The life insurance industry accommodates sellers and buyers, much like any other
industry. Sellers make available life insurance policies which are meant to mitigate
the risks to which buyers are exposed. In insurance, sellers are known as insurers,
while buyers are known as insureds. The life insurance industry operates within a
legal environment, in the same way as other industries do.

The following structure outlines topic 1 of this study guide:

Topic 1 consists of lesson units 1 and 2. Lesson Unit 1 discusses the life insurance
industry bodies which affect the life intermediary, while Lesson Unit 2 explains the
underlying legal and tax issues related to the industry. Topic 1 thus covers the
different industry bodies which affect the life intermediary, such as legal and
professional institutions, as well as industry associations. In addition, it provides the
legal framework within which the life intermediary operates.

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Open Rubric
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LESSON UNIT 1: LIFE INSURANCE INDUSTRY BODIES AFFECTING

THE LIFE INTERMEDIARY

Contents

1.1 Financial Sector Conduct Authority (FSCA)

1.2 Life Insurance Ombudsman
1.3 Association of Savings and Investments of South Africa (ASISA)
1.4 Insurance Institute of South Africa (IISA)
1.5 Financial Planning Institute (FPI)
1.6 Financial Intermediaries Association (FIA)
1.7 Black brokers associations
1.8 Institute of Retirement Funds (IRF)
1.9 Pension Lawyers Association (PLA)
1.10 Other intermediary groups
1.11 Other related bodies

Learning outcomes

When you have completed studying this lesson unit, you should be able to

• identify the industry bodies that affect the life intermediary, and explain how they
are structured
• identify the main purposes of each of the industry bodies that affect the life
insurance industry

Key concepts

Adjudicator
Mediator
Interest
Industry bodies
Life intermediary
Ombudsman

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Regulatory system
Representative body
Empowerment
Transform

Introduction

Study Chapter 1 of your prescribed book for a detailed discussion of the life insurance
industry bodies which affect the life intermediary. That chapter discusses more than
11 life insurance industry bodies – refer to the lesson content above. When studying
the chapter, pay attention to the purpose and structure of each industry body which
affects the life intermediary.

Overview

To achieve the learning outcomes of Lesson Unit 1, we recommend that, in addition

to studying your prescribed book, you also access the websites of each of the industry
bodies which affect the life intermediary.

1.1 Financial Sector Conduct Authority (FSCA)

Study this section in the prescribed book.

Website: www.fsca.co.za

Example 1.1 Access the website of the FSCA, to determine its purpose.

Type FSCA into the Google or Chrome search field:

You will land on:

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Figure 1.1a: FSCA website (accessed 12/08/2020)

Select “About Us” to view the purpose of the FCSA:

Figure 1.1b: FSCA website (accessed 12/08/2020)

Click “Who we are” in order to get to the following:

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Figure 1.1c: FSCA website (accessed 12/08/2020)

The paragraph entitled “What we do” covers the purpose of the FSCA.

Activity 1.1

Access the FSCA website and identify its structure.

Feedback on activity 1.1

How did you fare in completing activity 1.1? Did you manage to determine the
structure of the FSCA?

If you found it difficult to complete activity 1.1, we suggest that you do it again, until
you have mastered the skill of accessing a specific website and extracting the required
information. This exercise will not be repeated in the sections which follow. If you feel
comfortable with how you fared in activity 1.1, you are ready to proceed to the next
section.

You should have managed to obtain the following from “About us”:

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Figure 1.1d: FSCA website (accessed 12/08/2020)

Could you get to the screenshots below?

Figure 1.1e: FSCA website (accessed 12/08/2020)

When clicking on the FSCA organogram, you see:

Figure 1.1f: FSCA website (accessed 12/08/2020)

Activity 1.2

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Mqithana wanted to buy a retirement annuity from ABC Life Insurance company. Kim,
the representative of ABC Life Insurance, informed Mqithana to only sign the
proposal, saying they would complete everything later on. Although Mqithana signed
the proposal and left it with Kim, she was extremely concerned about this issue and
submitted a complaint to the FSCA. Was the FSCA the correct industry body to
receive this complaint?

Fe

Feedback on activity 1.2

What was your answer to the question?

Did you discover that this complaint could best be dealt with by the Ombudsman for
Financial Services Providers?

Note: In this module you will be expected not only to recall the purpose and structure
of organisations or associations, but also to show your understanding by solving a
problem, as you did in the above scenario. Activity 1.2 is a typical example of the type
of assessment to which you will be exposed.

1.2 Life Insurance Ombudsman

Study this section in the prescribed book.

Refer to the glossary uploaded under “Additional Resources” on myUnisa for the
meaning of ombudsman.

Website: www.ombud.co.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the office of the Life Insurance Ombudsman.

Purpose

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• The office of the long-term ombudsman is regarded as an effective and efficient

alternative to legal processes.
• A complainant who remains aggrieved after a decision by the ombudsman is free
to commence legal proceedings, if s/he so desires.
• It is specifically provided that this office exercises authority in a spirit of
independence, by taking into account both the law and equity (see Insurance
Institute of South Africa, 2021, p. 2).

Structure
• The structure of the office of the life ombudsman comprises office staff and council
(board) members.

Activity 1.3

Lwazi submitted a disability claim to the insurer in June 2018. The insurer was
supposed to inform Lwazi about the outcome of his claim. Lwazi followed up with the
office of the insurer more than three times, but was told that his claim was being
processed. Early in January 2020, Lwazi submitted a complaint to the office of the
Life Insurance Ombudsman, who decided in favour of the insurer. Lwazi wants to
know what he can do next, as he is still aggrieved.

Fe

Feedback on activity 1.3

What was your answer to the question? Do you think Lwazi should forget about his
complaint?

The material in the prescribed book and on the website of the Life Insurance

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Ombudsman indicates that Lwazi is free to commence legal proceedings, as he

remains aggrieved.

1.3 Association of Savings and Investment South Africa (ASISA)

Study this section in the prescribed book.

Website: www.asisa.org.za

Follow the steps outlined in section 1.1 to access the website and find out more about
the purpose and structure of ASISA.

Purpose
To promote a culture of savings and investment in South Africa ( as outlined
on the ASISA website):

• Building a transformed, vibrant and globally competitive financial

sector.
• Actively participating in education, transformation and social
development.
• Encouraging South Africans to save.
• Promoting transparency and disclosure.
• Focusing on the consumer.
• Encouraging ethical and equitable behaviour.
• Collaborating with government to
o achieve level playing fields and healthy competition.
o engage on policy and regulatory issues.

Structure
• The structure of ASISA is made up of the board, governance committees and office
staff. Did you manage to find the following structure on the ASISA website?

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Figure 1.2: ASISA structure (see Figure 1.3 in https://www.asisa.org.za/about-us/governance-

structure/ – accessed 13/08/2020)

Activity 1.4

Explain the role and functioning of ASISA.

Fe

Feedback on activity 1.4

Refer to the suggested answer in the prescribed book.

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Activity 1.5

Doda is concerned about the design of her retirement annuity. When Doda bought
the product, she was 30 years old. Doda recalls informing the representative of the
insurer that the product had to have a 10% premium escalation per annum. However,
the contract indicates a 5% premium escalation. Doda wants to know whether ASISA,
as a savings and investment association, will be able to assist with her concerns.

Fe

Feedback on activity 1.5

What was your answer to the question? Did you realise that Doda’s concern does not
fall within the ambit of ASISA? It is therefore not ASISA’s purpose to deal with Doda’s
concerns.

ASISA is an association which represents corporate members, not individual persons.

1.4 Insurance Institute of South Africa (IISA)

Study this section in the prescribed book.

Website: www.iisa.co.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the IISA.

Purpose
• As with the CII, the major functions of the IISA include the awarding of
membership certificates to successful learners at various levels of professional
membership (IISA, 2021, p. 4).

Structure

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• The IISA has a permanent office in Johannesburg, under the control of the chief
executive.
• The institute is governed by a board of directors, comprised of the current president
of IISA, the deputy president, the immediate past president and the honorary
treasurer, as well as several industry body representatives and members elected
from the industry, assisted by full-time IISA executives.

Figure 1.3: IISA website (accessed 13/08/2020)

Activity 1.6

Luke decided to register for a certificate in life insurance, when compiling his
professional development programme (PDP) with his employer. Luke has indicated
the training provider as the IISA on the form, as well as the correct fees. The PDP
was approved by the employer. Was Luke’s PDP correct?

Fe

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Feedback on activity 1.6

Did you find the correct answer to the question? Remember, the IISA has outsourced
the delivery of education and training to preferred providers.

1.5 Financial Planning Institute (FPI)

Study this section in the prescribed book.

Website: www.fpi.co.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the FPI.

Purpose
• The object of the FPI is to be a representative body whose aims are to test, develop
and protect the competence of persons engaged in the life insurance, pensions
and healthcare industries, and the associated or related fields of personal financial
planning, healthcare and employee benefits consultancy.
• The aim of the FPI is to promote and advance the education of all its members,
through the continued development of the study and practice of all the relevant
principles.

Structure
• The FPI has a council, local chapters and office staff.
• The institute is supported by intermediaries from the life and employee benefits
arena, and internal staff and financial advisors operating in the broader field. It also
covers those involved in the provision of advice on health insurance, medical aids,
and so on.

Activity 1.7

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What is the mission of the FPI?

Fe

Feedback on activity 1.7

Refer to the suggested answer in the prescribed book.

Activity 1.8

Leon is the chief executive officer of Lolo Life Insurance Company. His strategy is to
improve skillsets in the areas of medical underwriting and the rating of health risks for
the next 12 months. Leon has instructed the human resource director to register all
the existing underwriters to write a relevant examination and attend professional
development activities. The human resource director wants your advice on Leon’s
instruction.

Fe

Feedback on activity 1.8

What is your advice to the human resource director? It is possible to write

examinations on medical underwriting and the rating of health risks with the FPI?

Remember, the FPI covers life insurance-related products such as medical aid,
healthcare and employee benefits.

1.6 Financial Intermediaries Association (FIA)

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Study this section in the prescribed book.

Website: www.fia.org.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the FIA.

Purpose
• The FIA’s primary purpose is to represent, protect, promote and further the
common interests of its members.

Structure
• The FIA represents more than 15 000 licenced financial services advisors
throughout southern Africa.
• Access the website of each association, by following the steps outlined in section
1.1 of this study guide.

Activity 1.9

ABC Partnership bought a group life policy for 250 employees. The policy includes
group life, group funeral and group dread benefits. Fifteen years after the policy
inception, the partners agreed to organise a workshop for its employees and decided
not to approach their insurer for the workshop, but to contract an independent service
provider. The partners have asked you whether the FIA is an appropriate body to
conduct this workshop for their employees. What will your response be to the
partners?

Fe

Feedback on activity 1.9

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The FIA represents licenced financial service providers and is not a financial service
provider – rather, it is the voice of financial service providers. Therefore, the FIA
cannot facilitate a workshop for the employees of ABC Partnership.

1.7 Black brokers associations

• This grouping includes the following industry bodies:

➢ Black Insurance Professionals of Southern Africa (BIPSA)
➢ Black Brokers Forum (BBF)
➢ Associations of Black Insurance Brokers (ABIB)

• Study the purpose and structure of each association, as outlined in the prescribed
book.
• All these associations have a related purpose, which is to promote the interests of
black brokers, thereby providing a “home” to previously disadvantaged brokers.

Access the website of each association by following the steps outlined in section 1.1
of this study guide.
Use the following website link to access the black brokers associations:
https://www.insurancegateway.co.za/ShorttermProfessionals/Directory/ViewCateg
ory/Irn=203&URL=Associations++Institutes+3

Activity 1.10

Suppose the government of the Republic of South Africa wants to improve the
participation of black brokers in the financial services industry. Suppose it has a
training budget to meet this objective. Which brokers associations should it approach?
Write down your answer on a piece of paper.

Fe

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Feedback on activity 1.10

All the associations which form part of the black brokers associations promote
transformation. Therefore, it would be correct to provide the funds to them.

1.8 Institute of Retirement Funds (IRF)

Study this section in the prescribed book.

Website: www.irf.org.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the IRF.

Purpose
• The IRF represents the retirement fund industry, which is largely made up of
privately registered funds, state funds, etc., in the retirement fund field.

Structure
• The IRF has a board and a small secretariat.

Activity 1.11

In 1999, the IRF identified Lusanda as the best student in her class and she received
a certificate of achievement. Lusanda now intends to register with the IRF to pursue
a degree in retirement funds. Advise Lusanda on whether her plan will work. Can
Lusanda register with the IRF for a degree in retirement funds?

Fe

Feedback on activity 1.11

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Lusanda cannot complete a degree in retirement funds with the IRF, as it does not
provide or administer any examinations.

1.9 Pension Lawyers Association (PLA)

Study this section in the prescribed book.

Website: www.pensionlawyers.co.za

Follow the steps outlined in section 1.1, to access the website and to find out more
about the purpose and structure of the PLA.

Having followed the steps mentioned in the paragraph above, you should see the
following, which explains the purpose of the PLA:

Figure 1.4: PLA website (accessed 14/08/2020)

Structure
• The PLA has a board and a small secretariat.

Activity 1.12

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Lizzy has recently received a degree in law. While doing her articles, Lizzy applied to
become a member of the PLA. Do you think Lizzy will be accepted as a member?
Hint: Check the different categories of membership of the PLA.

Feedback on activity 1.12

Yes, Lizzy will be granted membership.

1.10 Other intermediary groups

This section of the book will not be assessed. Read this section for personal
enrichment.

1.11 Other related bodies

1.11.1 South African Reinsurance Offices Association (SAROA)

This section of the prescribed book will not be assessed. You may read this
section for personal enrichment.

1.11.2 South African Society of Insurance Medical Underwriters (SASIMU)

Study this section in the prescribed book.

It is difficult to access the website of SASIMU, therefore the information in the

book will be used for assessment.

Purpose
• To improve the communication amongst, and professionalism of, life insurance
underwriters.

Structure
• SASIMU has a board and a small secretariat.

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Activity 1.13

Outline the aims of SASIMU.

Fe

Feedback on activity 1.13

Refer to the suggested answer in the prescribed book.

1.11.3 Association of Insurance Medical Officers of South Africa (AIMOSA)

This section of the book will not be assessed – read it for personal enrichment.

1.11.4 Pension Funds Adjudicator (PFA)

Study this section in the prescribed book.

Website: www.pfa.org.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the PFA.

Having followed the steps mentioned in the paragraph above, you should see the
following, which explains the purpose of the PFA:

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Figure 1.5: PFA website (accessed on 15/08/2020)

Structure
• The PFA consists of a policy board and the office of the adjudicator. It is situated
in the offices of the FSCA. Note: Replace FSB with FSCA in this section of the
prescribed book.

Activity 1.14

For 35 years, Mrs X worked as a domestic assistant in Johannesburg. On her

retirement in June 2010, her employer paid her R14 000 as a pension lump sum. Mrs
X is unhappy about this lump sum.

Advise Mrs X on whether the PFA office can assist her in this regard.

Hint: Are domestic employers registered to provide pension payouts to their

employees?

Fe

Feedback on activity 1.14

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The PFA works with complaints arising from registered pension funds. It is unlikely
that it will assist in the case of Mrs X, who worked as a domestic assistant.

1.11.5 Ombud for Financial Services Providers (FAIS Ombud)

Study this section in the prescribed book.

Website: www.faisombud.co.za

Follow the steps outlined in section 1.1, to access the website and find out more about
the purpose and structure of the FAIS Ombud.

Having followed the steps mentioned in the paragraph above, you should see the
following, which explains the purpose of the FAIS Ombud:

Figure 1.6: FAIS Ombud website (accessed on 15/08/2020)

Structure

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• The FAIS Ombud has a policy board and is situated in the office of the FSCA.

• Activity 1.15

Kalu is a representative of LMN Life Brokers. During 2010, Kalu advised Boya that
contributions paid to a retirement annuity are all tax deductible. Later, Boya realised
that this is not the case for all such contributions. Boya intends to submit a complaint
about Kalu to the office of the FAIS Ombud.

Advise Boya on whether the FAIS Ombud is the right office to assist.

Write down your answer, before looking at the suggested answer.

Feedback on activity 1.15

You are correct if you thought that the office of the FAIS Ombuds could indeed assist
Boya.

1.11.6 Board of Healthcare Funders (BHF)

Study this section in the prescribed book, especially section 1.11.6.

1.11.7 Council for Medical Schemes (CMS)

Study this section in the prescribed book, especially section 1.11.7.

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Website: www.medicalschemes.co.za

1.11.8 Insurance Sector Education and Training Authority (INSETA)

Study this section in the prescribed book, especially section 1.11.8.

Website: www.inseta.org.za

Activity 1.16

What are the different sub-sectors that INSETA addresses?

Fe

Feedback on activity 1.16

The different sub-sectors are

• life and non-life insurance
• pension funding
• risk management
• unit trusts
• healthcare benefits
• funeral benefits
• reinsurance, and
• financial intermediaries.

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Conclusion

Based on what you have learnt thus far, reflect on what you consider to be the most
important information for understanding life insurance.

Sources consulted
Insurance Institute of South Africa (IISA). 2019. Long-term insurance. Sandton: IISA.
Insurance Institute of South Africa (IISA). 2021. Principles of Life Insurance. Sandton:
IISA.
Republic of South Africa (RSA). 2017. Insurance Act 18 of 2017. Pretoria:
Government Printer.

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