Insurance Brokers Fear for Their Jobs

INSURANCE brokers fear they are being pushed out of their livelihood following new regulations and fees implemented by the financial services regulator, Namfisa.

Following the highly talked of directive, Namfisa recently held a meeting with the brokers to clarify matters.

Namfisa spokesperson, Isack Hamata said in an interview that one of the main concerns of the brokers is the set time frame.

This was also confirmed by the chairperson of the Association for Independent Marketers, Ernst Hanstein, who said the time given for brokers who were previously registered by Namfisa as agents, to re-register as brokers was too short.

Although the law was changed in 1998, Namfisa never implemented it until now.

Brokers used to build their businesses with so-called ‘agents’, which was previously allowed by Namfisa. “Now all of a sudden, these brokers have to re-register under different requirements, including providing the N$25 000 guarantee,” Hanstein said.

Hanstein added that N$25 000 is beyond reach for most brokers. “Some of these people will go out of business and eventually the public will suffer,” he said in reference to the possibility of contracts being suspended suddenly.

Hamata said that because of the concerns raised, Namfisa might reconsider the initial six months to comply with the directive if brokers make a written representation.

“They are concerned about the time frame that was given to them to comply with the said registration directive. They requested the effective date to be extended by 12 months to allow them to obtain the required N$25 000 bank guarantee for every registered insurance broker (both juristic and natural),” said Hamata.

According to Hanstein, a lot of brokers will not be able to sell insurance policies anymore, because they do not comply with the requirements, which he said may dent the operations of the insurance industry.

“This is one service (insurance cover) people do not realise they need and must be reminded by someone selling insurance,” he said.

During the meeting, brokers complained that they are not treated fairly compared to insurance companies whose sales representatives are not required to deposit a guarantee of N$25 000.

Hamata justified the Namfisa directive saying it is not only to enforce the law but also to close loopholes in order to prevent deliberate ill intentions or undesirable market practices by brokers.

“The particular registration directive to insurance brokers and agents and reinsurance brokers was merely a reminder to the industry that the provisions of the Acts on the N$25 000 bank guarantee registration requirement for insurance brokers are to be enforced from 1 December 2014,” he said.

According to the Long-term Insurance and Short-term Insurance Acts, no person shall take on the business of an insurance agent or insurance broker or re-insurance broker unless such person is registered to carry out any such business.

“That simply means anyone doing business as an insurance broker without being duly registered with Namfisa is doing illegal insurance business and may be liable to sanctions in terms of the Acts. Such sanctions can be as severe as being liable for a penalty of N$150 000 or imprisonment for a period of 10 years,” said Hamata.

Furthermore, Hamata warned consumers not to entrust their money in the hands of people who pretend to be insurance brokers but are not registered with Namfisa. “Consumers have the right to demand proof of such registration by Namfisa from anyone purporting to be an insurance broker,” he said.

Source : The Namibian