Insurance & Pensions Commission Amendment Bill H.B. 7, 2024

This is a Bill — H.B. 7 of 2024 — not law. It would amend the Insurance and Pensions Commission Act, and its centrepiece is a new safety net for policyholders and pension fund members.

A Policyholder and Pensions and Provident Fund Members Protection Fund would be established as a body corporate, run by a board of up to eight members appointed by the Minister — a Commission representative, representatives of general insurers, long-term insurers, policyholders and fund members chosen from their associations, a ministry representative and one other. Its object would be to compensate policyholders and pension, provident and retirement annuity fund members for losses suffered directly because a contributor became insolvent, and to pay out unclaimed benefits to their rightful owners.

Every insurer and every pension, provident or retirement annuity fund would have to contribute, at rates and times to be prescribed. Refusing to pay would be an offence carrying a fine of up to three times the contribution, and the court could give summary judgment for the amount in the Fund's favour. The Fund would also take in unclaimed benefits that have gone unclaimed for more than five years, unclaimed benefits after a fund is dissolved or an insurer wound up, penalties, investment income and parliamentary appropriations. Unclaimed benefits and the interest on them would be held in security for their rightful owners, and could only be diverted to other Fund objectives — with the Minister's approval — after thirty years.

Claims would be limited. Nothing would be payable for claims arising before the Fund began operating, or on reinsurance policies, and no compensation would be paid on indemnity policies where a solvent contributor is also liable. Compensation could be reduced to account for amounts already received from a liquidator or insurer. A false or fraudulent claim would carry a fine up to level 14 or twice the value obtained, whichever is greater, or up to thirty-five years' imprisonment. Not more than 25 per cent of the Fund's annual income could go on staff remuneration.

The Bill would also tighten governance of the Commission itself. The board would grow from five appointed members to between seven and nine appointed directors, chosen for expertise in pensions, insurance, actuarial work, law, finance, HR or IT, with a four-year term renewable once. Anyone employed by a regulated entity, owning more than 5 per cent of one, closely related to its staff or holding a controlling stake would be disqualified for conflict of interest. Calling a special board meeting would require 50 per cent of directors rather than two. Finance, risk, audit and remuneration committees would become mandatory.

On supervision, the Commission would gain express power to approve actuaries, asset managers, credit rating agencies and other service providers, to investigate any registered person, and to monitor associates of insurers, brokers, medical aid societies and fund administrators — with "associate" and "control" defined, control being a 10 per cent stake or the power to appoint or remove directors. Failing to supply information the Commission requests would become an offence carrying a fine up to level seven, up to two years' imprisonment, or both.

The Commission would keep asset registers for regulated entities, and no insurer, broker, medical aid society or pension fund could dispose of a registered asset without fourteen days' written notice, an independent valuation and reasons; the Commission could stay a disposal not in members' interests. Disposing in breach would carry a fine up to the value of the asset disposed of, up to five years' imprisonment, or both, with pension fund board members jointly and severally liable. New provisions would also indemnify Commission members and staff against personal liability except for intentional, reckless or grossly negligent acts, and give anyone aggrieved by a Commission decision fourteen days to appeal to the Minister.

One drafting inconsistency to note: the definition of "associate" cites the Companies and Other Business Entities Act variously as Chapter 24:31 and Chapter 22:31, and refers in one paragraph to the "Companies Act". The correct citation is Chapter 24:31.