Learning Materials Facilitator Guide

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					                                                         “Working together for a skilled tomorrow”




                           Learning Materials

               Unit Standard Title:              Demonstrate knowledge and insight
                                                 into the Short Term Insurance Act
                                                 (No.53 of 1998) and the
                                                 accompanying regulations


               Unit Standard No:                 10194


               Unit Standard Credits:            2


               NQF Level:                        4



                             Facilitator Guide

                    This outcomes-based learning material was
                                    developed by
                             Diagonal Broker Network
                                   and reviewed by
                                     Ben Tonkin
                    with funding from INSETA in October 2003.


                        The material is generic in nature.
         Its purpose is to serve as a guide for the further development
             and customization of company-specific, learner-specific
                  and situation-specific learning interventions.


                                           Disclaimer:
Whilst every effort has been made to ensure that the learning material is accurate, INSETA takes no
 responsibility for any loss or damage suffered by any person as a result of the reliance upon the
                                   information contained herein.




                                                                                                      1
Unit Standard 10194                                                 Facilitator Guide




                                  CONTENTS
                                                                       PAGE

                         Cover Page                                        1
                         Profile of facilitator                            3
                         Instructions to Facilitator                    3-6
                         Programme Outline                             7 - 12

 Specific               Explain the purpose of the Short Term
                      1 Insurance Act (53 of 1998)
 Outcome


                        Explain the basic requirements of the
                      2 Short Term Insurance Act as they apply to
                        insurers


                        Explain how the Short Term Insurance Act
                      3 controls intermediaries


                        Explain how the Short Term Insurance Act
                      4 regulates short term insurance policies
                        and protects individual policyholders

 Assessment
                         Oral Questionnaire                           13 - 14
 Tools
                         Summative Assessment Test                    15 – 18
                         Model Answers                                19 - 23
                         Short Term Insurance Act, 1998 (Separate
 Annexure A
                         document)
                         Regulations of the Act (Separate
 Annexure B
                         document)
                         Policyholder Protection Rules (Separate
 Annexure C
                         document)
 Annexure D              Oral assessment feedback form                    24
 Annexure E              Written assessment feedback form             25 - 28
 Annexure F              Rubric for assessment of POE                 29 - 31
                         PowerPoint Presentation (Separate
                         document)


                                                                                   2
Unit Standard 10194                                                     Facilitator Guide



Profile of Facilitator

The facilitator must be a subject matter expert who is familiar with the Short
Term Insurance Act (No 53 of 1998) and the accompanying regulations. The
facilitator must have a good working knowledge of outcomes based education
and training and ensure that the learning is interactive. Facilitator must
facilitate towards outcomes as specified in the unit standard. Facilitator must
ensure that by the end of the learning process, the learner is able to do
specific outcomes and has evidence of such in the form of a Portfolio of
Evidence (POE).

Instructions to the facilitator
Facilitators are in their preparation for the presentation of this training
material, required to obtain, and familiarise themselves with, the following
documents:

    •    (Annexure A)
         Short Term Insurance Act (no 53 of 1998)
         (Note: This document does not contain the full version of the Short
         Term Insurance Act, but only parts of it, necessary for this specific Unit
         Standard.)
         A complete version of the Act can be obtained from www.acts.co.za

    •    (Annexure B)
         Regulations under the Act

    •    (Annexure C)
         Policyholder Protection Rules

    •    User Guide (Separate document)

    •    Learner Guide (Separate document)

    •    Learner Workbook (Separate document)

    •    Questions and answers (Separate document)

    •    PowerPoint Presentation (included in this unit standard)

    •    For further reading refer to www.deneysreitz.co.za (Insurance Report
         of 1998)

Having obtained a copy of these documents the facilitator, where appropriate,
must refer to it when presenting the programme.

The learners should also receive copies of Anne xure A, B and C, if Internet
access is unavailable. If Internet access is available, these documents can be
obtained via the Internet.




                                                                                       3
Unit Standard 10194                                                       Facilitator Guide




The material is designed as an integrated Unit. It is quite possible either to
add additional material reflecting, for example, the companies own needs or
procedures.

The learners should be expected to do further reading and self-research. It is
not necessary for the facilitator to give all the information needed in order to
complete the Workbook during the training session with the learners. Learners
should read and research the information in the Act in order to gain a practical
understanding of the concepts therein.
(Learners should be careful when paraphrasing concepts from the Act to not
change the actual meaning!)

To prepare for the presentation, the facilitator should work through the
Facilitator Guide, which details the relevant points to be made in relation to
each PowerPoint slide, and either by following the script, or by incorporating
company specific orientation and procedures relating to the Short Term
Insurance Act, make the presentation unique to his or her company.

Important Notes to Facilitator

    •    Introduce the learning material with a general discussion about the
         NQF and national qualifications.
    •    Explain to the learner that in order to gain credits for this particular unit
         standard, evidence that the learner is able to know and do the
         assessment criteria will have to be produced by the learner. Facilitator
         must ensure that learners know exactly what is required of them.
    •    Advise learners of the importance of the Portfolio of Evidence and how
         all formative assessment, i.e. exercises conducted in the Learner
         Workbook during and after the learning programme, form part of their
         portfolio.
    •    Develop a learning action plan with the learner, setting specific contact
         dates and deadlines for completion of certain sections of the material.
         The facilitator and the learner must keep a copy.
    •    Advise the learner that oral and written feedback will be given during
         contact sessions and will form part of his/her assessment.
    •    Hand the oral assessment feedback form (Annexure D) and written
         assessment feedback form (Annexure E) to the learner, so that the
         learner knows what he/she will be assessed on during the contact
         session.
    •    Go through the activities that the learner is required to complete to
         ensure that the learner understands what is required of him/her.
    •    Explain to learner that on completion of the learning programme, the
         learner will complete a summative assessment, which will be
         conducted in a controlled environment. This will also form part of his/
         her Portfolio of Evidence.




                                                                                         4
Unit Standard 10194                                                 Facilitator Guide




    •    Have the relevant constituents on hand:
                   § Laptop
                   § Projector
                   § PowerPoint presentation slides (included in this Unit
                      Standard)

    •    Go through the material deciding where you will refer to your own
         organisation’s procedures relating to the Short Term Insurance Act of
         1998.
    •    As you work through material, relate the information to actual in-
         company situations. The relevance factor always has effective impact
         on participants by enchanting their capacity to retain information and
         reinforcing learning points.
    •    For the group exercises, divide participants into groups and have them
         discuss the question and agree on an answer. Let each group
         nominate a spokesperson to present the group’s answer.

    Contact sessions
      • At each contact session, spend a few minutes reviewing the
         exercises, notes and feedback submitted by the learner, as agreed
         to in the learner action plan.
      • Assess whether the learner is able to demonstrate knowledge and
         understanding of the material that the learner was required to cover
         at this point. Answer any questions the learner may have regarding
         the material and/or any questions he/she may have around the
         learning process.
      • Facilitator to complete the oral assessment feedback form
         (Annexure D) and the written feedback form (Annexure E)
         pertaining to the section of material covered. This feedback must be
         discussed with the learner and must be added to his/her portfolio.
      • The learner and facilitator must end the session by reviewing the
         learner action plan and agreeing on material to be covered by the
         next contact session.
      • Should the evidence submitted by the learner for the previous
         section not be sufficient, learner and facilitator must agree on the
         additional evidence that is required and a date must be set for
         submission of that evidence.

Assessment
  • To achieve this unit standard, the learner must undergo formative
     assessment, which is continuous of oral participation and research
     from various resources throughout the learning process and summative
     assessment at the end of the learning process.
  • The facilitator/line manager is permitted to validate the formative and
     summative assessment, all of which must be added to the Portfolio of
     Evidence. The whole Portfolio of Evidence is the assessed by the
     registered assessor using the enclosed rubric (Annexure F).



                                                                                   5
Unit Standard 10194                         Facilitator Guide




Assessment summary
See User Guide 5.1, page 10.

Specific Outcomes and Assessment Criteria
See User guide 5.2.3 pages 12 & 13.

Learner Notes
See separate document: Learner Guide

Learner Workbook
See separate document

Module Questions and Answers
See separate document




                                                           6
Unit Standard 10194                                                         Facilitator Guide




                               Programme Outline

                                Unit Standard10194

 Demonstrate knowledge and insight into the Short Term Insurance Act
         (No 53 of 1998) and the accompanying regulations.




                              CONTENT                                       NOTES


    •    Welcome the Learners.                                            Introduction
    •    Introduce yourself and ask the Learners to introduce
         themselves using the name they would prefer you and the
         other learners to call them during the training.
    •    Introduce the learning material with a general discussion
         about the NQF and national qualifications.
    •    Explain to the learners that in order to gain credits for this
         particular unit standard, evidence that they are able to know
         and do the assessment criteria will have to be produced by
         them. Facilitator must ensure that the learners know exactly
         what is required of them.
    •    Advise learners on the importance of the Portfolio of
         Evidence and how all formative assessment, i.e. exercises
         conducted in the Learner Workbook during and after the
         learning programme, form part of their portfolio.
    •    Develop a learning action plan with the learners, setting
         specific contact dates and deadlines for completion of certain
         sections of the material.
    •    Advise the learners that oral and written feedback will be
                                                                          Handouts 1
         given during contact sessions and will form part of their
                                                                          Learner
         assessment.
                                                                          Guide,
    •    Hand the oral assessment feedback form (Annexure D) and          Learner
         written assessment feedback form (Annexure E) to the
                                                                          Workbook,
         learners, so that they know what they will be assessed on
                                                                          Annexure A,
         during the contact sessions.
                                                                          B and C
    •    Go through the activities that the learners are required to      (If internet
         complete to ensure that they understand what is required of      connection is
         them.                                                            unavailable).
    •    Explain to learners that on completion of the learning
         programme, they will complete a summative assessment,            Annexure D
         which will be conducted in a controlled environment. This will   Annexure E
         also form part of their Portfolio of Evidence.
    •    Tell the learners that they will now have the opportunity to
         demonstrate knowledge and insight into the Short Term
         Insurance Act (No 53 of 1998) and the accompanying
         Regulations.




                                                                                           7
Unit Standard 10194                                                   Facilitator Guide




Specific Outcome 1:
Short Term Insurance                                                Slide 1
Refer to Learner Guide: Background

1.1 The reason for the Short Term Insurance Act is explained.       Slide 2
    • Ask the Question: Why is it necessary to have Short Term
       Insurance Legislation?
    • Ask the learners where can they buy a hard copy of the
       Short-Term Insurance Act for less than R 10.00.


Refer to Learner Guide 1.2
                                                                    Slide 3
1.2 Terminology defined in section 1 of the Short Term
    Insurance Act is explained.

Learner Guide 1.2
Refer to terminology in the Short Term Insurance Act, Section 1
(Annexure A).
Explain what the following words mean:
   • Registrar
   • representative
   • intermediary
   • policyholder
   • insurer
   • premium
   • risk

Refer to Learner Guide 1.3

1.3 The concept of short term insurance is explained with          Slide 4
    reference to the different classes of business defined in the
    Short Term Insurance Act.
    • Ask the learners if they know what the primary function of
        insurance is.
    • Explain to the learners what “peace of mind” means.
    • The different classes of business are explained.
    • Name and explain the different types of Short-term Insurance
        policies.


Refer to Learner Guide 1.4
                                                                    Slide 5
1.4 The parties governed by the Short Term Insurance Act are
    named and indication is given of the role of the Registrar in
    administering the Short Term Insurance Act.
    • Name the parties governed by the Act.
    • Explain the role and duties of the Registrar.




                                                                                     8
Unit Standard 10194                                                        Facilitator Guide




Refer to Learner Guide 1.5

1.5 The consequences of non-compliance with the Short Term               Slide 6
    Insurance Act for a short term insurance organisation are
    named, and an indication is given of the recourse that a
    client has to the Registrar in cases of non-compliance.

    •    Refer to Section 64 of the Act and explain to learners the
         consequences of non-compliance.

    •    Refer to Section 65, in terms of the Act, the recourse that a   Slide 7
         policyholder has to the Registrar in cases of non-
         compliance, to the short term insurance company.
    •    Administer the self-assessment exercise


Refer to Learner Guide: Specific Outcome 2

2.1 The requirements for registration as an insurer are listed as        Slide 8
    prescribed in the Short Term Insurance Act.

    •    Refer to Part II, Section 7 of the Act to explain the
         requirements of registration.
    •    Refer to Section 56 for provisions relating to Lloyd’s
         underwriters.



Refer to Learner Guide 2.2

2.2 Returns that an insurer is required to submit to the                 Slide 9
    Registrar are identified and an indication is given of the
    consequences of non-compliance.

    •    Name the documents that the insurer has to return to the
         Registrar relating to his business.
    •    What are the consequences (penalties) for failure by insurers Slide 10
         to furnish the Registrar with the returns as specified in the
         Act?


Refer to Learner Guide 2.3

2.3 The concept of solvency margin is explained in terms of              Slide 11
    approved assets over liabilities.

    •    Explain what the solvency margin of a company is.
    •    Give the definition of an asset and a liability.

    •    Explain what the Registrar could do if he feels a company’s     Slide 12
         solvency margin is too low.



                                                                                          9
Unit Standard 10194                                                           Facilitator Guide




Refer to Learner Guide 2.4

2.4 The requirements imposed on Lloyd’s are compared to                     Slide 13
    those that apply to any other insurance organisation in
    terms of registration and operations.

    •    Refer to Section 56 of the Act, prescribing the provisions
         relating to Lloyd’s underwriters.
    •    The requirements relating to registration and operations
         pertaining to other short term insurers are contained in Part II
         Section 7 of the Act.
    •    Administer self-assessment questions.

Refer to Learner Guide:

Specific Outcome 3                                                          Slide 14
Explain how the Short term Insurance Act controls
intermediaries.

    •    Name the three classes of intermediaries, explaining what
         each one means.

    •    Refer to Section I(xliv) of the Act, “services as intermediary”.   Slide 15
    •    Give the definition of an independent intermediary (Learner
         Guide 3)

Refer to Learner Guide 3.1

3.1 The way in which commission and certain fees are                        Slide 16
    regulated is explained with reference to Short Term
    Insurance Act.

    •    Explain what the concept “commission” means.

    •    Refer to Section 48 of Regulations of the Act, which               Slide 17
         stipulates the maximum commission payable to
         intermediaries.


Refer to Learner Guide 3.2

3.2 Limitations on business practices in terms of placing                   Slide 18
    business with insurers are described with reference to case
    studies and Short Term Insurance Act.

    •    Refer to Section 43 of the Act in terms of free business
         relating to credit insurance.

    •    Case study: Joe Profit                                             Case study 1




                                                                                           10
Unit Standard 10194                                                         Facilitator Guide




Refer to Learner Guide 3.3

3.3 The concept of a Lloyd’s binder is explained and the                  Slide 19
    criterion used by Lloyd’s to enter into an underwriting
    relationship with an intermediary is described with
    reference to specialist classes of business.

    •    Refer to Lloyd’s of London and the definitions as explained in
         the Learner Guide 3.3.
    •    Refer to Part VIII; Section 57 of the Act, prescribing the
         criteria that should be used by Lloyd’s to enter into an         Group work
         underwriting relationship with an intermediary.


Refer to Learner Guide 3.4

3.4 The way in which Lloyd’s binders are regulated is explained           Slide 20
    with reference to case studies and the Short term Insurance
    Act.

    •    Refer to Part VII, Section 48 of the Act, explaining how
         Lloyd’s binders are regulated in terms of the Act.


Refer to Learner Guide 3.5

3.5 The rights and responsibilities of an intermediary in
    accounting to the insurer are explained with reference to the
    collection and payment of premiums.

    •    Explain briefly what “premiums” are and how the Act protects
         the client regarding premiums handled by an intermediary,
         referring to Section 45 and Regulation 4 of the Act           Slide 21
    •    Refer to Section 45 and Regulation 4 of the Act, dealing with
         collection of premiums by intermediaries
    •    Intermediary to provide guarantee
    •    Payment over to insurer in 15 days
    •    Only one intermediary to collect personal lines premium
    •    Premiums for a policy can be paid in different ways
    •    When premiums are payable and
    •    Receipts (to be issued) for premiums paid in cash.
    •    Administer self-assessment questions.




                                                                                         11
Unit Standard 10194                                                        Facilitator Guide




Refer to Learner Guide: Specific Outcome 4.

4.1 The standard duration of policy is explained with reference          Slide 22
    to Short Term Insurance Act.

    •    Standard duration of a short term policy.

    •    The decision to avoid, cancel or reject a claim.


Refer to Learner Guide 4.2

4.2 Rules governing policies issued to minors are explained              Slide 23
    with reference to Short Term Insurance Act.

    •    Explain the rules regulating to policies issued to minors,
         referring to Part VII, Section 52 of the Act.


Refer to Learner Guide 4.3

4.3 Reasons why a personal lines policy must be issued within            Slide 24
    a prescribed period are explained with reference to the
    rights and responsibilities of both parties to the contract.

    •    Describe Personal lines insurance.
    •    Give reasons why a personal lines policy must be issued
         within a prescribed period.
    •    Describe the minimum terms of the contract.
    •    Broadly describe the terms of an insurance contract.


Refer to Learner Guide 4.4

4.4 The way in which the Short Term Insurance Act protects               Slide 25
    individual policyholders is explained with reference to
    Section 55 of the Act and the Policyholder Protection rules.

    •    Part VII, Section 55 of the Act, relates to the protection of
         policyholders. (Annexure C)
    •    Discuss this protection with reference to the role that the
         Advisory Committee and Registrar assume in the protection
         of policyholders.
    •    Administer self-assessment questions.




                                                                                        12
Unit Standard 10194                                                       Facilitator Guide



Oral Questionnaire


Name of Learner: _________________________________

Unit Standard: ___________________________________



Unit Standard 10194:
Demonstrate knowledge
and insight into the Short                                                 Competent/
Term Insurance Act (NO            Question             Answer given          Not yet
53 of 1998) and the                                                        competent
accompanying
regulations.
Specific Outcome 1:
Explain the purpose of the Short Term Insurance Act (53 of 1998.)

Assessment Criteria:

1.The reason for the Short    Why is it necessary to
  Term Insurance Act is       have short term
  explained in terms of the   insurance legislation?
  need for legislation in
  insurance.

4. The parties governed by Name the parties
  the Short Term Insurance governed by the Short
  Act are named and term insurance Act.
  indication is given of the
  role of the Registrar in
  administering the Short
  Term Insurance Act.
Specific Outcome 2:
Explain the basic requirements of the Short Term Insurance Act as they apply to
insurers.

3.The concept of solvency     Explain the concept
  margin is explained in      solvency margin in
  terms of approved assets    terms of approved
  over liabilities.           assets over liabilities.

Specific Outcome 3:
Explain how the Short Term Insurance Act controls intermediaries.

1.The    way    in   which    Explain the way in
  commission and certain      which commission and
  fees are regulated is       certain fees are
  explained with reference    regulated with
  to Short Term Insurance     reference to the Short
  Act.                        Term Insurance Act.




                                                                                       13
Unit Standard 10194                                                       Facilitator Guide




                                                                           Competent/
   Unit Standard: 10194                Question            Answer given     Not Yet
                                                                           competent
Specific Outcome 4:
Explain how the Short Term Insurance Act regulates short term insurance policies and
protects individual policyholders.

2.Rules governing policies      Explain the rules
  issued to minors are          governing policies
  explained with reference      issued to minors with
  to Short Term Insurance       reference to the Act.
  Act.

3.Reasons why a personal        Explain why a
  lines policy must be          personal lines policy
  issued within a prescribed    must be issued within
  period are explained with     a prescribed period,
  reference to the rights       with reference to the
  and responsibilities of       rights and
  both    parties   to    the   responsibilities of both
  contract.                     parties to the contract.




Date: __________________________________


Signature of the Learner: _______________________________


Name of the Assessor: _________________________________


Signature of the Assessor: ______________________________




                                                                                       14
Unit Standard 10194                                              Facilitator Guide




Summative Assessment Test               (Duration: 60 minutes)

Unit Standard: 10194
Demonstrate knowledge and insight into the Short Term Insurance Act
(No 53 of 1998) and the accompanying regulations.

Question 1:
Why is it necessary to have Short Term insurance legislation?

______________________________________________________________

______________________________________________________________

______________________________________________________________


Question 2:
Name four different short term insurance policies.
Explain what each policy means.

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________




                                                                              15
Unit Standard 10194                                                Facilitator Guide



Question 3:
Name the parties governed by the Short Term Insurance Act.

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________


Question 4:
Describe the “Role of the Registrar” in administering the Short Term
Insurance Act.

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________


Question 5:
What are the consequences for a short term insurance organisation for non-
compliance to the Short term Insurance Act (with reference to the Act)?

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________


                                                                                16
Unit Standard 10194                                                     Facilitator Guide




______________________________________________________________

______________________________________________________________

______________________________________________________________


Question 6:
List all the returns that an insurer, including Lloyd’s representatives, is
required to submit to the Registrar.


______________________________________________________________

_____________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

_____________________________________________________________

_____________________________________________________________


Question 7:
Regulations of the Act, Section 48, stipulate the maximum commission
payable to intermediaries. Briefly explain what it says.


______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________



                                                                                     17
Unit Standard 10194                                                  Facilitator Guide




Question 8:
Explain the rights and responsibilities of an intermediary in accounting to the
insurer with reference to the collection and payment of premiums as it is
specified in the Act.

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________


Question 9:
Give a definition of each of the following:

9.1      “Lloyd’s broker”

______________________________________________________________

______________________________________________________________

9.2      “independent intermediary”

______________________________________________________________

______________________________________________________________

9.3      “policyholder”

______________________________________________________________

______________________________________________________________

9.4      “short-term insurer”

______________________________________________________________

______________________________________________________________

9.5      “risk”

______________________________________________________________

______________________________________________________________



                                                                                  18
Unit Standard 10194                                                  Facilitator Guide




Summative Assessment Test                 (Questions and Answers)

Unit Standard: 10194
Demonstrate knowledge and insight into the Short Term Insurance Act
(No 53 of 1998) and the accompanying regulations.

Question 1:
Why is it necessary to have Short Term insurance legislation?

Answer:

1. To regulate the short term industry.
2. To ensure that insurers remain solvent and are able to discharge their
   duties to the public, and also ensure that the insured public is protected. It
   also spells out the legal requirements of brokers and other intermediaries
   as regards to their conduct and payment of premiums to insurers. Insurers
   are required to register and strict conditions are imposed on registration.
(Source: Learner Guide, Outcome 1.1)


Question 2:
Name four short term insurance policies.
Explaining what each policy means.

Answer:

1.       “Accident and health policy”
         Means a contract in terms of which a person, in return for a premium,
         undertakes to provide policy benefits in a –
                  •   Disability event;
                  •   Health event; or
                  •   Death event.


2.       “Motor policy”
         Means a contract in terms of which a person, in return for a premium,
         undertakes to provide policy benefits if an event, contemplated in the
         contract as a risk relating to the possession, use or ownership of a
         motor vehicle, occurs; and includes a reinsurance policy in respect of
         such a risk.

3.       “Transportation policy”
         Means a contract in terms of which a person, in return for a premium,
         undertakes to provide policy benefits if an event, contemplated in the



                                                                                  19
Unit Standard 10194                                                      Facilitator Guide




         contract as a risk relating to the possession, use or ownership of a
         vessel, aircraft or other craft or for the conveyance of persons or goods
         by air, space, land or water, or to the storage, treatment or handling of
         goods so conveyed or to be so conveyed, occurs; and includes a
         reinsurance policy in respect of such a risk.

4.       “Property policy”
         Relates to the use, ownership, loss or damage to movable or
         immovable property.

(Source: Government Gazette; No.19277. 23 Sept. 1998. Sec I.)



Question 3:
Name the parties governed by the Short Term Insurance Act.

Answer:
                  •   The Registrar
                  •   insurers
                  •   intermediaries (e.g. brokers)
                  •   policyholders (insured)
                  •   representatives
                  •   any other entity that may involve himself in the process.

Question 4:
Describe the “Role of the Registrar” in administering the Short Term
Insurance Act.
Answer:
The Registrars duties are wide ranging, and the Registrar must ensure that
insurers comply with the following:
                  •   submission of statements and accounts;
                  •   statement of liabilities;
                  •   statement of assets;
                  •   solvency margin regulations;
                  •   separation of assets;
                  •   commission rates for intermediaries.
The Registrar shall submit to the Minister a report on the Registrar’s activities
under this Act during each year ending 31 December, and shall furnish any
additional information relating to anything done by the Registrar under this Act
that the Minister may require.


(Source: Government Gazette; No.19277. 23 Sept. 1998. Part I, Sec 2.)



                                                                                      20
Unit Standard 10194                                                       Facilitator Guide




Question 5:
What are the consequences for a short term insurance organisation for non-
compliance to the Short term Insurance Act (with reference to the Act)?

Answer:
The consequences of non-compliance by any offender are defined in Sect 64
of the Act as follows:

    •    the offender shall be guilty of an offence
    •    and shall be liable on conviction to a fine of up to R100 000 depending
         on the category of offence as well as the type of offender.
    •    imprisonment not exceeding one year
    •    or both such fine and imprisonment
    •    the non-compliance with the administrative return requirements as they
         relate to returns shall be to the value R 1000 per day for every day that
         a return remains outstanding.

(Source: Government Gazette; No.19277. 23 Sept. 1998. Part ix, Sec 64.)

Question 6:
List all the returns that an insurer, including Lloyd’s representatives, is
required to submit to the Registrar.

Answer:
Every registered short term insurer must, within 4 months of the end of his
financial year, send in the prescribed format, copies of the statements and
accounts to the Registrar, which are:
           • a revenue account in respect of each class of business
              conducted;
           • a profit and loss account in respect of his business as a whole,
              including business other than insurance business – e.g.
              investment income;
           • a balance sheet showing the company’s financial position at the
              end of the financial year;
           • copies of the statements prepared in accordance with the
              Companies Act 1973, within 14 days of their presentation to the
              shareholders.

(Source: Source: Government Gazette; No.19277. 23 Sept. 1998. Part IV, Sec 35 and
Part XIII, Sec 58.)




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Unit Standard 10194                                                        Facilitator Guide



Question 7:
Explain how commission and certain fees are regulated in the Short Term
Insurance industry.

Answer:
The Act stipulates the maximum commission payable to intermediaries (sec
48 of Regulations). These are as follows:
             • Motor policy, maximum commission – 12,5% of the premium
                 payable under the policy
             • Non-motor maximum commission – 20%
             • Collective policies written through Lloyd’s – 20%
             • Any other policy written through Lloyd’s – 25%

These rates are payable on the annual premium and are payable only when
the premium has been paid to the ins urer, expect in that the broker may
deduct his commission and pay the insurer the net difference between the
two.

(Source: Regulations: Sec 48, of the Act)


Question 8:
Explain the rights and responsibilities of an intermediary in accounting to the
insurer with reference to the collection and payment of premiums as it is
specified in the Act.
Answer:
The Act deals with the collection of premiums by intermediaries in Section 45.
Details will be found in the Regulations Part 4. It provides that no intermediary
shall “receive, hold or in any other manner deal with premiums payable under
a short term policy” (not including short term reinsurance policies) and short
term insurers may not permit such dealing in premiums, unless the
intermediary is authorised to do so by the short term insurer in accordance
with the Regulations.

(Source: Government Gazette; No.19277. 23 Sept. 1998. Part VII, Sec 45.)

Question 9:
Give a definition of each of the following:

9.1      “Lloyd’s broker”
         A person permitted by the Lloyd’s Council to perform acts as a broker
         at Lloyd’s.



9.2      “independent intermediary”
         A person, other than a representative, who renders services as
         intermediary and includes a Lloyd’s correspondent.




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Unit Standard 10194                                                       Facilitator Guide




9.3      “policyholder”
         The person entitled to be provided with the policy benefits under a
         short-term policy

9.4      “short-term insurer”
         A person registered or deemed to be registered a short-term insurer
         under the Short term insurance Act.

9.5      “risk”
         A possibility that a particular event may occur during the period for
         which a short-term policy is operative.

(Source: Government Gazette; No.19277. 23 Sept. 1998. Section 1, Definitions.)




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Unit Standard 10194                                                  Facilitator Guide



Oral Assessment Feedback Form                                    Annexure D




Learner Name: ________________________________

Unit Standard: ________________________________




                          Action                            Yes/No     Comments

The learner brought summaries and notes made to the
session for discussion. The learner makes notes during
the discussion, where notes are required to be
transcribed.

The learner is able to:
Interpret documents related to the rules of the Short
Term Insurance Act, 1998. (Annexure A)
Interpret documents related to Regulations of the Short
Term Insurance Act. (Annexure B)


The learner can take part in group discussions by talking
about other learners’ feedback and reports.




Date: __________________________________


Signature of Facilitator: _________________________


Signature of Learner: ___________________________




                                                                                  24
Unit Standard 10194                                                     Facilitator Guide



Written Assessment Feedback Form                                      Annexure E


Learner Name: ________________________________


Unit Standard: ________________________________


                                                           Specific
Question                       Activity                    Outcome    Comments

1.1 The reason for the Short Term Insurance Act is explained in terms of the need for
    legislation in insurance.

     1         Why is it necessary to have Short Term         1.1
               Insurance legislation?

     2         What is contained in the Short Term            1.1
               Insurance Act?

               Can you think of any technology that
     3         has been developed recently which has          1.1
               required that new types of cover be
               introduced?

1.2 The parties governed by the Short Term Insurance Act are named and indication is
    given of the role of the Registrar in administering the Short Term Insurance Act.
             In order to understand, why and how
             short term insurance is regulated by the
  4.1-4.7    Act, you have to understand the               1.2
             following terminology (Section 1 of the
             Act). Explain the following in your own
             words:

1.3 The consequences of non-compliance with the Short Term Insurance Act for a short
    term insurance organisation are named, and an indication is given of the recourse
    that a client has to the Registrar in cases of non-compliance.

               Explain what the concept “short term
     5         insurance business” means.                     1.3

               What are the different classes of
     6         business defined in the Short Term             1.3
               Insurance Act?

  7.1-7.3      Explain what the following types of            1.3
               policies mean:

               Go home and ask your family to share
     8         with you what kind of policies they have.      1.3
                   • Ask them why they bought that
                       particular policy.
                   • Categorize your feedback into
                       the various classes of policies.




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Unit Standard 10194                                                       Facilitator Guide




1.4 The concept of short term insurance is explained with reference to the different
    classes of business defined in the Short Term Insurance Act.

     9         Name the parties governed by the Short        1.4
               Term Insurance Act.
                                                          1.4
    10        Describe the “role of the Registrar” in
              administering the Short Term Insurance
              Act.
1.5 The consequences of non-compliance with the Short Term Insurance Act for a short
    term insurance organisation are named, and an indication is given of the recourse
    that a client has to the Registrar in cases of non-compliance.
              What are the consequences for a short
    11        term insurance organisation for non-        1.5
              compliance to the Short term Insurance
              Act (with reference to the Act)?

               Explained what the recourse is, in terms
    12         of the Act, that a policyholder has to the    1.5
               Registrar in cases of non-compliance,
               to the short term insurance company?

  1A - 1F   Self Assessment Questions                   1.5
2.1 The requirements for registration as an insurer are listed as prescribed in the Short
    Term Insurance Act.
    13      What are the requirements for the           2.1
            registration as an insurer?

2.2 Returns that an insurer is required to submit to the Registrar are identified and an
    indication is given of the consequence s of non-compliance.
             List all the returns that an insurer,
    14       including Lloyd’s representatives, is      2.2
             required to submit to the Registrar.

               What are the consequences (penalties)
    15         for failure by insurers to furnish the        2.2
               Registrar with the returns as specified in
               the Act?

2.3 The concept of solvency margin is explained in terms of approved assets over
    liabilities.
               Provide a definition of both an asset and
    16         a liability and also name the documents   2.3
               that one could use to obtain this
               financial information.

               The following is a list of items that could
    17         be found on an insurers balance sheet.        2.3
               In the space provided alongside each
               item, you are to indicate whether the
               item is an asset or a liability.




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Unit Standard 10194                                                         Facilitator Guide




2.4 The requirements imposed on Lloyd’s are compared to those that apply to any other
    insurance organisation in terms of registration and operations.
            Compare the acquirements imposed on
    18      Lloyd’s to those that apply to any other     2.4
            insurance organisation in terms of
            registration and operations.

 2.A - 2.G     Self-Assessment Questions                   2

3.1 The way in which commission and certain fees are regulated is explained with
    reference to Short Term Insurance Act.
    19      What does the concept “commission” in 3.1
            the short term insurance industry
            mean?

               Explain how commission and certain
    20         fees are regulated in the Short Term        3.1
               Insurance industry.

3.2 Limitations on business practices in terms of placing business with insurers are
    described with reference to case studies and Short Term Insurance Act.
    21       Case Study: Joe Profit                     3.2

3.3 The concept of a Lloyd’s binder is explained and the criterion used by Lloyd’s to enter
into an underwriting relationship with an intermediary is described with reference to
specialist classes of business.
             Explain in your own words what you
    22       understand under the concept of a           3.3
             Lloyd’s binder.

               Group work: Discuss the criterion that
    23         should be used by Lloyd’s to enter into     3.3
               an underwriting relationship with an
               intermediary (with reference to the Act).

3.4 The way in which Lloyd’s binders are regulated is explained with reference to case
    studies and the Short Term Insurance Act.
             Group work: Explain how Lloyd’s
    24       binders are regulated in terms of        3.4
             Section 48 of the Act.

3.5 The rights and responsibilities of an intermediary in accounting to the insurer are
    explained with reference to the collection and payment of premiums.
            Explain the rights and responsibilities of
    25      an intermediary in accounting to the        3.5
            insurer with reference to the collection
            and payment of premiums as it is
            specified in the Act.

 3.A - 3.C     Self-assessment Questions                   3




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Unit Standard 10194                                                      Facilitator Guide




4.1 The standard duration of policy is explained with reference to Short Term Insurance
    Act.
    26      What is the standard duration of a          4.1
            business /commercial policy?

4.2 Rules governing policies issued to minors are explained with reference to Short Term
    Insurance Act.
            Explain the rules regulating policies
    27      issued to minors.                           4.2

4.3 Reasons why a personal lines policy must be issued within a prescribed period are
    explained with reference to the rights and responsibilities of both parties to the
    contract.
              Give the reasons why a personal lines
    28        policy must be issued within a         4.3
              prescribed period.

4.4 The way in which the Short Term Insurance Act protects individual policyholders is
    explained with reference to Section 55 of the Act and the Policyholder Protection
    rules.
            Group work: Section 55 of the Act
            relates    to   the    protection    of
            policyholders. Discuss this protection
    29      with reference to the role that the
            Advisory Committee and Registrar          4.4
            assume      in   the   protection   of
            policyholders.

 4A - 4B              Self-Assessment Questions         4




Date: _______________________________


Signature of Facilitator: _________________________


Signature of Learner: ___________________________




                                                                                      28
Unit Standard 10194                                                                 Facilitator Guide



                                                                                  Annexure F


Rubric for Assessment of Portfolio of Evidence by registered assessor


Learner Name: ________________________________


Unit Standard: ________________________________


                                        Specific Outcome 1
                 Explain the purpose of the Short Term Insurance Act (53 of 1998.)

                 Assessment Criteria                         Learner is             Learner is not yet
                                                             Competent                 competent
                                                                                  Questions are
                                                        Questions are
                                                                                  answered incorrectly,
                                                        answered in clear
                                                                                  or not clearly.
                                                        sentences explaining.

1.1 The reason for the Short Term Insurance Act is      E.g. The reason for       E.g. The reason for
    explained in terms of the need for legislation in   the Short Term            the Short Term
    insurance.                                          Insurance Act is          Insurance Act is not
                                                        explained in terms of     explained in terms of
                                                        need for legislation in   need for legislation in
                                                        insurance.                insurance.
1.2 Terminology defined in section 1 of the Short
    Term Insurance Act is explained in own words.

1.3 The concept of short term insurance is
    explained with reference to the different
    classes of business defined in the Short Term
    Insurance Act.

1.4 The parties governed by the Short Term
    Insurance Act are named and indication is
    given of the role of the Registrar in
    administering the Short Term Insurance Act.

1.5 The consequences of non-compliance with the
    Short Term Insurance Act for a short term
    insurance organisation are named, and an
    indication is given of the recourse that a client
    has to the Registrar in cases of non-
    compliance.




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Unit Standard 10194                                                         Facilitator Guide




                                     Specific Outcome 2
  Explain the basic requirements of the Short Term Insurance Act as they apply to insurers.

                 Assessment Criteria                    Learner is         Learner is not yet
                                                        Competent             competent
2.1 The requirements for registration as an insurer
    are listed as prescribed in the Short Term
    Insurance Act.

2.2 Returns that an insurer is required to submit to
    the Registrar are identified and an indication is
    given of the consequences of non-compliance.

2.3 The concept of solvency margin is explained in
    terms of approved assets over liabilities.

2.4 The requirements imposed on Lloyd’s are
    compared to those that apply to any other
    insurance organisation in terms of registration
    and operations.


                                       Specific Outcome 3
                Explain how the Short Term Insurance Act controls intermediaries.

3.1 The way in which commission and certain fees
    are regulated is explained with reference to
    Short Term Insurance Act.

3.2 Limitations on business practices in terms of
    placing business with insurers are described
    with reference to case studies and Short Term
    Insurance Act.

3.3 The concept of a Lloyd’s binder is explained
    and the criterion used by Lloyd’s to enter into
    an underwriting relationship with an
    intermediary is described with reference to
    specialist classes of business.

3.4 The way in which Lloyd’s binders are regulated
    is explained with reference to case studies and
    the Short Term Insurance Act.

3.5 The rights and responsibilities of an
    intermediary in accounting to the insurer are
    explained with reference to the collection and
    payment of premiums.




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Unit Standard 10194                                                      Facilitator Guide




                                    Specific Outcome 4
    Explain how the Short Term Insurance Act regulates short term insurance policies and
                             protects individual policyholders

                 Assessment Criteria                    Learner is       Learner is not yet
                                                        Competent           competent
4.1 The standard duration of policy is explained
    with reference to Short Term Insurance Act.

4.2. Rules governing policies issued to minors are
     explained with reference to Short Term
     Insurance Act.

4.3 Reasons why a personal lines policy must be
    issued within a prescribed period are explained
    with reference to the rights and responsibilities
    of both parties to the contract.

4.4 The way in which the Short Term Insurance Act
    protects individual policyholders is explained
    with reference to Section 55 of the Act and the
    Policyholder Protection rules.




                                                                                      31