Fin24 reports that amended policyholder protection rules for the group insurance industry came into effect in October last year, in the interests of keeping policyholders better informed.  

But, Michele Jennings, CEO of Sanlam Group Risk, pointed out that this required so much information to be provided to individual members that they would likely just be confused or overwhelmed.  "We all fully subscribe to the idea that individual members of a group risk policy need to know more about what they are covered for by their employer," Jennings stated, citing a recent case where a company was liquidated and the members of the employer's group risk policy did not know or realise that their membership to the policy had been terminated.  The rules now make provision for the policyholder to convey the required information or communication to the individual members.  "We have seen mixed responses from employers and brokers.  We deal with a lot of small employers who do not necessarily have the capacity to do all that is required," Jennings noted.  In her view, many employers might not realise the mass of information involved.  At the same time, the ultimate responsibility to monitor compliance with the rules, was with the insurer.  "At this stage the insurer is absorbing the extra costs involved - for Sanlam Group Risk this will probably mean an extra R10m in costs per year," Jennings indicated, adding that it would be very difficult for insurers to earn extra money for doing all of this for employers.

• Read the full original of Carin Smith’s report on the above at Fin24

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