Section 20 bis insurance
amendment makes few waves despite initial consternation
THE LATE 1997 amendment to Section 20 bis of the Insurance Act hasn't caused the problems for the forwarding industry that everyone presumed at this time last year, according to Caroline da Silva, executive director of the SA Insurance Association (SAIA).
From January 1 last year, forwarders (and furniture removers) were included alongside insurance brokers in the amended legislation - and literally had to become approved collectors of insurance, or possibly land in jail.
The legal changes were aimed mainly at the less-reputable amongst brokers - who were happily pocketing premiums that were due to be paid to insurers. But the wording of the changes - and the fact that forwarders/furniture removers also collect premiums from clients, and pay them on to the insurers as part of their disbursement business - meant that they had to comply with a new set of laws surrounding this practice.
Practically, they had to get letters of authority (allowing them to collect the premiums) from all the insurers with whom they did business. They also had to be members of the Intermediate Guarantee Fund (IGF). If they did not comply with either of these demands, the Financial Services Board in the Department of Finance had the legal right to come down on them like a ton of bricks.
At the time that FTW reported this late in January, forwarders were professing that this was a heart attack or ulcer situation for an industry which had always had a near spotless reputation in the honesty of their insurance dealings.
Said Da Silva: After your article, I had a load of phone calls from people in the trade who were really worried about this new law. We also had AMUSA (Association of Marine Underwriters of SA) threatening to sit down with the authorities to thrash out a less disturbing amendment.
But, Da Silva added, it all seems to have been quietly sorted out, and become just another accepted change in the procedure of insurance premium collection by the forwarding sector.
