Amendments to Section 20 bis still causing forwarders grief
THE RECENT amendments to Section 20 bis of the Insurance Act might still be lurking as a trap for unprepared forwarding agents - those banking insurance premiums on their way from insured to underwriter, but without the appropriate documentation to fulfil this task legally.
If - from January 1 - you haven't had letters of authority from all the insurers with whom you do business (these authorising you to collect their premiums); and if you are not a member of the Intermediaries Guarantee Fund (or have similar, appropriate bank guarantees to cover you), you could be contravening the new regulations under the Financial Services Board. These are intended as a control on unscrupulous middlemen (brokers) who pocket underwriters' cash not aimed at the forwarding community per se.
But, the law still stands. And, until SAAFF (SA Association of Freight Forwarders) completes its submission to the Board asking for exemption for the forwarding sector, there will be no change. This, however, is "still in process", according to SAAFF executive director, Edward Little.
And, meantime, a near similar submission from AMUSA (Association of Marine Underwriters of SA) - incorporating the area of forwarders, hauliers and the like in its preamble - has already been rejected, according to AMUSA chairman, Dave Keeling. "I think we would have done better with both bodies' submissions together," he said. "It would have added more muscle to the case."
What is happening in the forwarding industry is not clear. Four sources approached with this question - Little, Keeling, Renfreight executive in charge of insurance Chris Oppenheim, and Caroline da Silva, executive director of the SA Insurance Association (SAIA) - all professed themselves "unclear" on the overall picture.
Da Silva - who will advise callers on this matter - has had "lots" of queries from forwarders. But this does nothing to illustrate things numerically, she added.
She defines the main thinking amongst forwarders with whom she has had communication as being: "Do I collect premiums and bank them? If I do that, will I make enough interest to cover the added administrative costs?"
If they do - the answer is: register as a forwarder/broker. If not, however, act as the "silent postman" in carrying insurance monies. Two cheques. One for insurance, and one for freight charges. Act as insured-underwriter go-between - but no banking on the way.
