Regulatory and Process Changes Series – Terminations

Rule 20 of the revised Policyholder Protection Rules (PPR’s), which has to do with the termination of policies, could have the biggest impact on how and when you move schemes between insurers in future.

It is now necessary to confirm whether there are Material Differences between the new and the old policy.

Material Differences refers to any changes in circumstances that result in a member or beneficiary not being entitled to claim under the new policy, i.e. any instance where they may have been able to claim under the old policy where they will be unable to after the move.

If a scheme moves insurers and it has been confirmed that there are Material Differences, members now need to be notified of any Material Differences at least 31 days before the effective date of the change.

Insurers require proof that this has been done and this could be in the form of copies of the communication to staff, signed attendance registers of communication sessions held, etc.

In order to assist in ensuring compliance, the TSA Acceptance forms will now ask the following questions:

  1. Is this a new or existing group?
  2. If this is an existing group, are there material differences between the old and the new policy? (Please provide a copy of the Record of Advice, or a similar document indicating the disclosure of the differences to the client, as well as the old policy wording or the latest annual review letter)
  3. If there are material differences, how and when were the members of the group scheme notified of these? (Please provide proof of such communication)

It is critical that in instances where Material Differences have been identified, members are notified at least 31 days before the effective date of the move. In instances where members have not been notified, the effective date of the policy will need to be moved.

Please let us know if you have any specific questions relating to this or suggestions on how these new requirements can be handled in the most simple and effective manner.

Thank you and regards,
The TSA Team


Vol. 9 Issue 2

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