NCR Call For Comments on Credit Life Insurance
NCR To Make Recommendations To DTI
Consumers who take out credit are asked to carry insurance to cover their untimely death (which would result in the credit not being paid back). This is called Credit Life insurance. Commonly this type of insurance also covers a number of other benefits like retrenchment cover or income interruption.
In the past, this type of insurance was heavily abused by greedy credit providers and insurance providers and was seldom if ever claimed on. Over time that has changed and industry leaders have become super competitive both on price and benefits.
From time to time the DTI look at regulations about this type of insurance. At present, the NCR is helping prepare comments for the DTI about this topic.
NCR Circular
The NCR sent out a circular which said in part:
The National Credit Regulator (“NCR”) is conducting a review of the Credit Life Insurance Regulations, 2017 (“CLI regulations”). The purpose of the review is to make an assessment of the areas of the CLI regulations requiring changes and to make recommendations to the Department of Trade, Industry and Competition (“dtic”).
The NCR hereby invites stakeholders to submit comments and inputs on the areas of the CLI regulations which they believe require changes, including but not limited to:
2.1. the calculation of the cost of credit life insurance on the deferred amount at the inception of the credit agreement (straight line method) or on the deferred amount from time to time under the credit agreement (declining balance method (regulation 3(1));
2.2. the maximum prescribed cost of credit life insurance per product category, and any pricing adjustment required for each product category (regulation 3(1));
2.3. the credit life insurance covers or benefits (regulation 3(2));
2.4. the exclusion or limitation of certain covers or benefits (regulation 4(1));
2.5. the power of the NCR to request information demonstrating compliance with certain sub-regulations (regulation 3(6) and (8));
2.6. the risk underwriting on an individual or group basis (regulation 3(7));
2.7. the intervals at which the exclusions and limitations must be explained and communicated to consumers (regulation 4(2));
2.8. the waiting period for credit agreements with a term of more than six months (regulation4(3));
2.9. the exclusion of a waiting period for short term loans of one month or less (regulation 4(4));
2.10. benefits in addition to the minimum benefits (regulation 5);
2.11. annual charging of credit life insurance (regulation 6);
2.12. the substitution of credit life insurance policy (regulation 7); and
2.13. any other matter which stakeholders want to bring to the attention of the NCR regarding the CLI regulations, including ways in which the CLI regulations can be tailored to meet the demands of future natural disasters and health pandemics.
The comments must be submitted to Mr Bongani Gwexe at email address bgwexe@ncr.org.za, by close of business on Wednesday, 30 June 2021.
Associations Only?
The NCR circular calls on all to make comments and send them in to the NCR directly. This seems to differ from the CIF procedure for other matters.
If you are thinking of making comments to the CIF on this or other topics and you are not a member of a Debt Counsellors association you may have your submission to the CIF ignored. According to Middah Makhatholela of the Banking Association of South Africa (BASA), CIF can only take comments on an association level, due to the wording of the CIF Charter.
There are several associations that Debt Counsellors can join and make submissions via. At present, the Association with the most members is the Debt Counsellors Association of South Africa (DCASA) and the association representing the most consumers under debt review is the National Debt Counsellors Association. other smaller groups are the Alliance of Professional Debt Counsellors (AllProDC), the Black Debt Counsellors Forum (very quiet these days) and the Independent Debt Counsellors Collective (iDCC).