Consumer protection requirements

Roseanne Murphy Harris says rules introduced by the demarcation regulations for the protection of consumers include the following:

• Commission payable to insurance brokers on health insurance policies has been limited to prevent mis-selling. Commission is now set according to monthly premium bands, ranging from a maximum of 20% of premiums less than R300 a month, to a maximum of 5% of premiums above R1 200 a month.

• Insurers are prohibited from discriminating against individuals by refusing them cover or increasing their premiums on the basis of their state of health, because they have a disability or because they are pregnant. However, insurers may price premiums based on the age of the policyholder when taking out a contract, provided that this pricing affects all new policyholders of the same age.

• Insurers may impose a general waiting period of up to three months on policyholders before they can submit a claim, as well as a condition-specific waiting period of up to 12 months. This will apply to individuals who have been diagnosed with or sought treatment for an illness or condition in the year preceding the date on which they take out a new policy.

• As part of the Treating Customers Fairly principles adopted by the financial services industry, the terms of policies, the premiums payable, as well as any restrictions on benefits, must be disclosed when a policy is taken out.