House Chairperson, the ACDP asserts that the Long-Term Insurance Amendment Bill addresses an important gap in consumer protection, particularly in the funeral insurance market.
The Bill responds to concerns that policyholders may hold multiple funeral policies covering the same beneficiaries or life event, only to discover the limitations of such overlapping cover when a claim is made.
The need for this Bill is therefore clear. Many South Africans, particularly low-income households, faithfully pay funeral insurance premiums because they want to protect their families from the financial burden associated with death. It is fundamentally unfair if consumers pay multiple premiums without receiving a clear understanding of whether those policies provide additional benefits.
The ACDP understands that this Bill seeks to empower the Financial Sector Conduct Authority (FSCA) to prescribe rules protecting holders of multiple funeral policies. It also requires insurers to disclose the consequences of multiple policies, gives policyholders the right to cancel duplicate policies covering the same life event, and protects the validity of a policy where another funeral policy was not disclosed. Importantly, insurers can face sanctions for failing to comply.
The ACDP believes that the consequences could be significant. For consumers, the Bill should mean greater transparency, informed choice, and potentially reduce unnecessary premium payments. It will also strengthen accountability within the insurance industry.
However, Parliament must guard against unintended consequences. Additional compliance and administrative requirements could increase costs for insurers, and there is a possibility that these costs could ultimately be reflected in premiums. We must also ensure that regulatory requirements are proportionate and do not disadvantage smaller insurers or reduce competition.
Protection must translate into meaningful financial relief and certainty for policyholders, not merely additional regulation. South Africans must never be placed in a position where they pay for protection for years, only to discover at the moment of greatest need that the protection they purchased does not provide what they reasonably expected.
As Kingdom builders, the ACDP welcomes the Bill’s consumer protection objective.
I thank you.
