Insurance Act, 2017 (Act No. 18 of 2017) Chapter 1 : Interpretation and Objective of Act 1. Definitions

 

 

"accident"

means an external, violent, unexpected and visible event;

 

"ancillary own funds"

consists of items, other than basic own funds, that may be called up by the insurer or controlling company, as the case may be, to absorb losses, excluding items that have been called up or paid;

 

"associate"

has the meaning set out in the International Financial Reporting Standards issued by the International Accounting Standards Board or a successor body;

 

"Auditing Profession Act"

means the Auditing Profession Act, 2005 (Act No. 26 of 2005);

 

"auditor"

means an auditor registered in terms of the Auditing Profession Act;

 

"basic own funds"

consists of—

 

"board of directors"

means—

 

"branch of a foreign reinsurer"

means an operating entity of a foreign reinsurer that is not a legal entity separate from the foreign reinsurer;

 

"captive insurer"

means an insurer that only insures first party risks;

 

"cell captive insurer"

means an insurer that only conducts insurance business through cell structures;

 

"cell structure"

means an arrangement under which a person (cell owner)—

 

"commercial lines"

means non-life insurance business other than in respect of personal lines;

 

"Companies Act"

means the Companies Act, 2008 (Act No. 71 of 2008);

 

"control"

in respect of the definition of controlling company, and sections 10, 17 and 22(2), has the meaning defined in section 2 of the Companies Act;

 

"control function"

has the meaning defined in the Financial Sector Regulation Act;

 

"controlling company"

means a holding company of, or another juristic person that controls, an insurance group, which is located in the Republic, designated under Part 4 of Chapter 2 and licensed under Chapter 4;

 

"Co-operatives Act"

means the Co-operatives Act, 2005 (Act No. 14 of 2005);

 

"death event"

means the event of the life of a person or an unborn having ended;

 

"director"

means a member of a board of directors and any alternate of such a member;

 

"disability event"

means any event resulting in—

 

"discretionary participation features"

means insurance obligations under a life insurance policy—

 

"eligible own funds"

comprise the sum of basic own funds and those ancillary own funds approved by the Prudential Authority as meeting the prescribed criteria for such funds, adjusted in accordance with the prescribed tiering restrictions;

 

"encumber"

means any pledge, restriction or limitation (including any contractual obligation that must be fulfilled before a contractual right may be exercised) that limits access to, or the use or disposal of, an asset;

 

"financial inclusion"

has the meaning defined in the Financial Sector Regulation Act;

 

"Financial Institutions (Protection of Funds) Act"

means the Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001);

 

"Financial Sector Code"

means the Financial Sector Code for Broad-Based Black Economic Empowerment issued in terms of section 9(1) of the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003);

 

"Financial Sector Conduct Authority"

has the meaning defined in the Financial Sector Regulation Act;

 

"Financial Sector Regulation Act"

means the Financial Sector Regulation Act, 2017;

 

"first party risks"

means—

 

"fit and proper requirements"

means—

 

"foreign branch of an insurer"

means an operating entity of an insurer that is part of the insurer in terms of its organisation and is not a legal entity separate from the insurer, but is established outside of the Republic;

 

"foreign reinsurer"

means an institution authorised and supervised by a regulatory authority to perform business similar to reinsurance business as defined in this Act under the laws of a country other than the Republic;

 

"governing body"

means a person or a body of persons, whether elected or not, that manages, controls, formulates the policy and strategy of the insurer or controlling company, directs its affairs or has the authority to exercise the powers and perform the functions of the insurer or controlling company;

 

"group of companies"

means any group of related or inter-related juristic persons, including a group of companies as defined in section 1 of the Companies Act;

 

"head of a control function"

has the meaning defined in the Financial Sector Regulation Act, and includes for purposes of this Act a person so appointed by a controlling company;

 

"health event"

means an event relating to the health of the mind or body of a person or an unborn, other than a disability event;

 

"insurance business"

means life insurance business or non-life insurance business conducted or regarded as being conducted in the Republic, and includes reinsurance business;

 

"insurance group"

means the group of entities designated by the Prudential Authority under section 10;

 

"insurance obligations"

means all obligations (other than the obligations of the policyholder), whether those obligations constitute an obligation to pay one or more sums of money, render services or meet any other obligations, under or arising from insurance policies, and, in respect of life insurance policies, includes any guarantees and discretionary participation features;

 

"insurance policy"

means a life insurance policy or a non-life insurance policy;

 

"insurer"

means a person licensed to conduct insurance business under this Act, and includes, unless specifically otherwise provided for in this Act, Lloyd’s, a Lloyd’s underwriter and a reinsurer;

 

"inter-related"

has the meaning defined in section 1 of the Companies Act;

 

"intra-group transaction"

means any arrangement or agreement in terms of which an insurer, directly or indirectly, relies on another person that is part of that insurer’s insurance group or a related or inter-related person of the aforementioned person, for the fulfilment of an obligation;

 

"joint arrangement"

has the meaning set out in the International Financial Reporting Standards issued by the International Accounting Standards Board or a successor body;

 

"juristic person"

has the meaning defined in the Financial Sector Regulation Act;

 

"key person"

means—

 

"life event"

means the event of the life of a person—

 

"life insurance business"

means any activity conducted with the purpose of entering into or meeting insurance obligations under a life insurance policy;

 

"life insurance policy"

means any arrangement under which a person, in return for provision being made for the rendering of a premium to that person, undertakes to meet insurance obligations—

and includes a renewal or variation of that arrangement;

 

"life insured"

means the person to whom a death, disability, health or life event under an insurance policy relates, which person may be or may not be the policyholder;

 

"Lloyd’s"

means the association of persons generally known as Lloyd’s which is incorporated by the Lloyd’s Act of 1871 (34 Vict. c21), passed by the Parliament of the United Kingdom of Great Britain and Northern Ireland;

 

"Lloyd’s underwriter"

means an underwriting member or non-underwriting member of Lloyd’s;

 

"microinsurance business"

means insurance business—

 

"microinsurer"

means an insurer licensed to conduct only microinsurance business;

 

"Minister"

means the Minister of Finance;

 

"non-life insurance business"

means any activity conducted with the purpose of entering into or meeting insurance obligations under a non-life insurance policy;

 

"non-life insurance policy"

means any arrangement under which a person, in return for provision being made for the rendering of a premium to that person, undertakes to meet insurance obligations that fully or partially indemnifies loss on the happening of an unplanned or uncertain event, other than—

and includes a renewal or variation of that arrangement;

 

"official website"

means a website as defined in section 1 of the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002), of the Prudential Authority;

 

"operational risk"

for the purposes of the definition of first party risks, means the risk of incurring losses as a result of inadequate or failed internal processes, people and systems, or from external events and excludes any risks associated with the insurance obligations of an insurer;

 

"outsourcing"

means an outsourcing arrangement as defined in section 1 of the Financial Sector Regulation Act;

 

"person"

has the meaning defined in the Financial Sector Regulation Act;

 

"personal lines"

means non-life insurance business where the policyholder is a natural person, acting otherwise than solely for the purposes of the person’s own business; and

 

"policyholder"

means—

 

"premium"

means any direct or indirect, or partially or fully subsidised, consideration given or to be given in return for an undertaking to meet insurance obligations;

 

"prescribed"

means prescribed by the Prudential Authority by Prudential Standard;

 

"Prudential Authority"

has the meaning defined in the Financial Sector Regulation Act;

 

"Prudential Standard"

means a standard prescribed by the Prudential Authority under section 63;

 

"public company"

has the meaning as defined in section 1 of the Companies Act;

 

"Regulation"

has the meaning defined in section 1 of the Financial Sector Regulation Act;

 

"regulatory action"

means the exercise of any power or function, or the taking of any action, by the Prudential Authority under this Act or another Act of Parliament;

 

"regulatory authority"

means—

 

"reinsurance business"

means—

 

"reinsurer"

means a person licensed to conduct—

(b)        only reinsurance business and the business referred to in section 25(7)(b), in the reinsurance class and sub-classes set out in Schedule 2, and, unless specifically provided for otherwise in this Act, includes a branch of a foreign reinsurer so licensed;

 

"related"

has the meaning as defined in section 1 of the Companies Act;

 

"rider benefit"

means an additional insurance obligation under a life insurance policy or a non-life insurance policy, which obligation is ancillary to the primary insurance obligations assumed under that policy;

 

"scheme"

for the purposes of sections 29 and 52, means a compliance scheme referred to in section 31, a recapitalisation scheme referred to in section 39 or a recovery scheme referred to in section 42;

 

"securities"

has the meaning as defined in section 1(1) of the Financial Markets Act, 2012 (Act No. 19 of 2012);

 

"senior manager"

means—

and "senior management" has a corresponding meaning;

 

"significant owner"

has the meaning as defined in section 1 of the Financial Sector Regulation Act;

 

"state-owned insurer"

means a state-owned company that conducts insurance business and is a public entity subject to the Public Finance Management Act, 1999 (Act No. 1 of 1999);

 

"strategy"

for the purposes of sections 29 and 52, means a recapitalisation strategy referred to in section 39;

 

"third party risks"

means, in respect of a cell captive insurer, risks other than first party risks;

 

"this Act"

includes any Prudential Standard or Regulation prescribed or made in terms of this Act;

 

"transformation of the insurance sector"

means transformation as envisaged by the Financial Sector Code for Broad-Based Black Economic Empowerment issued in terms of section 9(1) of the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003);

 

"Tribunal"

has the meaning as defined in the Financial Sector Regulation Act; and

 

"winding-up"

has the meaning as defined in the Financial Sector Regulation Act.