REPUBLIC OF SOUTH

GOVERNMENT GAZETTE

STAATSKOERANT
VAN DIE REPIJBLIEK VAN SUID-AFRIKA

CAPE TOWN, 23 SEPTEMBER 1998

Vol 399 No. 19276
KAAPSTAD, 23 SEPTEMBER 1998

I
OFFICE OF THE PRESIDENT KANT()()R VAN DIE PRESIDENT

No. 1190. 23 Sep[,mber 1998 No. I I 90. TJ s~p(~nlber 1 91)X

it is hereby notitid (hut the Acting President has assentd Hicrby w o r d beken(l gematik C1:II die Wu:irnclmndc Presi-
to the iollowing Act which is hereby published t’or general d e n t sy goedkeuring geheg IWI Mn dic tmlcrs[:lande Wet w:i[
in(ornmtion- hierby Ier algenwne inligting gepublist!cr wtml:-

No. 52 ot’ 1998: Long-term lnsurmx Act, 1998 N(). 52 vm 199X: L;illgterlllyll verscAcrit~gswct. 199X
2 No. 19270 GGVERNM 3NT GAZETTE. 23 SEPTEMBER 1998

Act N(I. 52, 1998 [.GNG-TERM INSLIRAN CE ACT, 1998

(English [Link] signed by the Acting P~esidetzt. )

([Link] to 15 September 1998.)

ACT
To provide for the registration of long-term insurer;; for the control of certain
activities of long-term insurers and intermediaries; and for matters connected
therewith.

B E IT ENACTED by the Parliament of the Rtpublic of South Africa, x

follows:-

ARRANGEMENT OF SECTIONS

Introductory provisions

Sectim 5

1. Definitions

Part I

Administration of Act

2. Registrar of Long-term Insurance

3. General provisions concerning Registrar 1 ()
4. Special provisions concerning Registrar and his or her powers
5. Annual report
6. Advisory Committee on Long-term Insurunce

Part 11

Registration of long-term ins~, rers 15

7. Registration required in order to carry on Iong-[erm insurance business

8. Prohibition on use of certain words, or perfonm; nce of certain acts, by certain
persons
9. Application for registration
10. Conditions of registration 20
11. Variation of registration conditions
12. Registrar may under certain circumstances pro libit long-term insurers from
carrying cm business
13. Termination of registration
14. Reregistration of long-term insurers as compan’ es 25

Part 111

Business and administration of long-hrm insurers

15. Limitation on business

16. Head oflice and public otlicer
17. Financial year 30
18. Notification of certain appointments and terminations
19. Auditor
20. Statutory actuary
4 N{). 1927fI GOVERNM xvi- GAZETTE, 23 SEtTEMBER I 998

Act No. 52, 1998 LONG-TERM [NSURAN CE ACT, 1998

21. Appointment of auditor or statutory actuary by Registrar

22. Removal of’ appointees who are not fit and pro[er
23. Audit committee
24. Preference shares, debentures, share capital ant share warrants
25. Registration of shares in name of nominee 5
26. Limitation on control and certain shareholding or other interest in long-term
insurers
27. Furnishing of information concerning shareholders
28. EtTect of registration of shares contrary to Act

Part IV 10

Financial arrangements

29. Maintenance of financially sound condition

30. Assets
31. Kinds and spread of assets
32. Deeming provisions concerning assets Is
33. Liabilities
34. Prohibitions concerning assets and certain liabilities
35. Failure to maintain financially sound condition
36. Returns to Registrar

Part V 20

Compromise, arrangement, amalgamation, demu tualisation and transfer

37. Court approval required for compromise, arrangement, amalgamation,

demutualisation or transfer
38. Application to Court
39. Conditions of approval 25
40. Approved transaction

Part VI

Judicial management and winding-up of h ng-term insurers

41. Judicial management

42. Winding-up by Court 30
43. Voluntary winding-up

Part VII

Business practice, policies and policyholder protection

Bf(siness practice

44. Free choice in certain circumstances 35

45. Prohibition on inducements
46. Policy to be actuarially sound
47. Receipt for premium paid in cash, and validity l~f policy
48. Summary, inspection and copy of policy
49. Limitation on remuneration to intermediaries 40
50. Undesirable business practice

Policies

51. Policy suspended until payment of first premiun I

52. Failure to pay premiums
53. Option for payment of policy benefits in money 45
54. Limitation on provisions of certain policies
55. Limitation on policy benefits in event of death cf unborn or of certain minors
6 No. 19276 GOVERNN ENT GAZETTE, 23 SEPTEMBER 1998

Act N(). 52, 1998 LONG-TERM INSURAI (CE ACT, 1998

56. Voidness of certain provisions of agreements rvlating to long-term policies

57. Life policy in relation to person rendering or liable to render military service
58. Long-term policies entered into by certain minors
59. Misrepresentation
60. Validity of contracts 5
61. Prescription of certain debt

Policyholder protection

62. Protection of policyholders

63. Protection of policy benefits under certain long-term policies
64. Option for realisation of protected policies 10
65. Partial realisation of protected policies

Part VIII

Offences and penalties

66. Offences by persons other than long-term insulers

67. Offences by long-term insurers 15
68. Penalty for failure to furnish Registrar with ret ]rns etc.

Part IX

Transitional and general prm isions

7’r~lnsitiona/ prol’[Link]

69. Continued registration of existing insurers 20

70. Certain existing insurers to cease short-term insurance business or to separate
it from long-term insurance business

General pro~isions

71. Special provisions concerning long-term insure]s that are not public companies
72. Regulations 25
73. Repeal and amendment of laws
74. Savings
75. Interpretation of certain references in existing I aws
76. Short title and commencement

Schedule 1 30

Kinds of assets

Schedule 2

Method of calculation of value of assets and liabilities

Schedule 3

Financial soundness method of calculation of value of assets and liabilities 35

x N(). 19276 GOVERNiI IENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52.1998 LONG-TERM INSLJRA JCE ACT, 1998

Schedule 4

Repeal and amendment of iaws

Introductory provisions

Definitions

1. ( I ) In this Act, unless the context otherwise indicales— 5

(i) “Advisory Committee” means the Advisory Committee on Long-term
Insurance established by section 6; (i)
(ii) “assistance policy” means a life policy in resp,;ct of which the aggregate of—
(a) the value of the policy benefits, other than an annuity, to be provided (not
taking into account any bonuses to be determined in the discretion of the 10
long-term insurer); and
(b) the amount of the premium in return f m which an annuity is to be
provided,
does not exceed R 10000, or another maximum amount prescribed by the
Minister; and includes a reinsurance policy in respect of such a policy; (iii) 15
(iii) “auditor” means an auditor registered in terms of the Public Accountants’ and
Auditors’ Act, 1991 (Act No. 80 of 199 I ), aml appointed in terms of section
19( 1) or 21( l)(u) of this Act; (xxvi)
(iv) “Board” means the Financial Services Board established by section 2 of the
Financial Services Board Act; (xxxi) 20
(v) “Companies Act” means the Companies Act, 1973 (Act No. 61 of 1973);
(xxi)
(vi) “company” means a company incorporated in accordance with, and
registered under, the Companies Act, or deemed to have been so incorporated
and registered; (xx) 25
(vii) “Court” means the High Court of South Africa; (xii)
(viii) “director” includes a person who is a member or alternate member of a body
performing, in relation to an entity that is not a company, functions similar to
those performed by a board of directors in [Link] to a company; (iv)
(ix) “disability event” means the event of the ful-,ctional ability of the mind or 30
body of a person or an unborn becoming imp; ired; (xxiv)
(x) “disability policy” means a contract in terms (If which a person, in return for
a premium, undertakes to provide policy benef ts upon a disability event; and
includes a reinsurance policy in respect of such a contract; (xxv)
(xi) “Financial Services Board Act” means the I:inancial Services Board Act, 35
1990 (Act No. 97 of 1990); (xxxviii)
(xii) “fund” means—
((1) a friendly society as defined in section 1 of the Friendly Societies Act.
1956 (Act No. 25 of 1956);
(b) a pension fund organization as defined in ;ection I of the Pension Funds 40
Act, 1956 (Act No. 24 of 1956);
(c) a medical scheme as defined in section 1 of the Medical Schemes Act,
1967 (Act No. 72 of 1967);
(d) a permanent fund, established bona jide for the purpose of providing
benefits to members in the event of sickne ;s, accident or unemployment, 45
or of providing benefits to surviving sp( uses, children, dependants or
nominees of deceased members, or mainly for those purposes; and
(t’) any other person, arrangement or busine:s prescribed by the Registrdr;
(vi)
(xiii) “fund policy” means a contract in terms of v. hich a person, in return for a 50
premium, undertakes to provide policy benefit for the purpose of funding in
whole or in part the liability of a fund to provide benefits to its members in
terms of its rules, other than such a contract relzting exclusively to a particular
member of the fund or to the surviving sp{ use, children, dependants or
nominees of a particular member of the fuml; and includes a reinsurance 55
policy in respect of such a contract; (vii)
(xiv) “health event” means an event relating to the } ealth of the mind or body of a
person or an unborn; (viii)
lo No, 19276 GOVERNN ENT GAZETTE, 23 SEPTEMBER 1998

Ad No. 52, 1998 LONG-TERM INSURAl {CE ACT. 1998

(xv) “health policy” means a contract in terms of which a person, in return for a
premium, undertakes to provide policy benefits upon a health event, but
excluding any contract—
(a) of which the contemplated policy benefit +———
(i) are something other than a stated sum of money; 5
(ii) are to be provided upon a person having incurred, and to defray,
expenditure in respect of any health service obtained as a result of
the health event concerned; and
(iii) are to be provided to any provider cf a health service in return for
the provision of such service; or 0
(b) (i) of which the policyholder is a medical scheme registered under the
Medical Schemes Act, 1967 (Act N.). 72 of 1967);
(ii) which relates to a particular member of the scheme or to the
beneficiaries of such member; and
(iii) which is entered into by the scheme to fund in whole or in part its 5
liability to such memb& or benefici tries in terms of its rule;;
and includes a reinsurance policy in respect o such a contract; (ix)
(xvi) “holding company” means a holding compan f as defined in section 1 of’ the
Companies Act; (xiii)
(xvii) “life event” means the event of the life of a p>rson or an unborn— 20
(a) having begun;
(b) continuing;
(c) having continued for a period; or
(d) having ended; (xviii)
(xviii) “life insured” means the person or unborn to vhose life, or to the functional 25
ability or health of whose mind or body, a Ion g-term policy relates; (xxxvi )
(xix) “life policy” means a contract in terms of u hich a person, in return for a
premium, undertakes tw--
(a) provide policy benefits upon, and exclusively as a result of, a life event;
30
(b) ~ay an annuity for a period;
and includes a reinsurance policy in respect o!’ such a contract; (xix)
(xx) “long-term insurance business” means the bus ness of providing or undertak-
ing to provide policy benefits under long-term policies; (xvii)
(xxi) “long-term insurer” means a person registere{ or deemed to be registered as 35
a long-term insurer under this Act; (xvi)
(xxii) “long-term policy” means an assistance po, icy, a disability policy, fund
policy, health policy, life policy or sinking fund policy, or a contract
comprising a combination of any of those policies; and includes a contract
whereby any such contract is varied; (xv) 40
(xxiii) “managing executive” means the chief [Link] officer of a long-term
insurer or a manager of that long-term insurt r who reports directly to that
chief executive officer; (XXXV)
(xxiv) “Minister” means the Minister of Finance or a ny other Minister to whom the
administration of this Act may be assigned from time to time; (xxii) 45
(xxv) “policy benefits” means one or more sums of money, services or other
benefits, including an annuity; (xxviii)
(xxvi) “policyholder” means the person entitled to be provided with the policy
benefits under a long-term policy; (xxvii)
(xxvii) “premium” means the consideration given o“ to be given in return for an 50
undertaking to provide policy benefits; (xxix)
(xxviii) “prescribe” means to determine from time to time by notice in the Gaxtte;
(xxxvii)
(xxix) “public company” means a company with a :thare capital which is a public
company under the Companies Act; (xxx) 55
(xxx) “Registrar” means the Registrar of Long-term f nsurance referred to in section
2(1); (xxxii)
(xxxi) “regulation” means a regulation under section 72; (xxxiii)
(xxxii) “reinsurance policy” means a reinsurance po I icy in respect of a long-term
policy; (xi) 60
l? N(). 1927(1 GOVERN! IENT GAZETTE, 23 SWTEMBER 1998

Ad No. 52, 1998 LONG-TERM INSURA 4CE ACT, 1998

(xxxiii) “repealed Act” means the Insurance Act, 1943 (Act No. 27 of 1943); (x)
(xxxiv) “sinking fund policy”’ means a contract, other than a life policy, in terms of
which a person, in return for a premium, ond;rtakes to provide one or more
sums of money, on a fixed or determinable fut Ire date, as policy benefits; and
includes a reinsurance policy in respect of such a contract; (ii) 5
(xxXv) “short-term insurer” means a person registered or deemed to be registered as
a short-term insurer under the Short-term Ins(trance Act, 1998; (xiv)
(xxxvi) “statutory actuary” means an actuary appointed in accordance with section
20(1) or 21(1 )(b); (xxxiv)
(xxxvii) “subsidiary” means a company which is, ill terms of section 1(3) of the 10
Companies Act, deemed to be a subsidiary ccrnpany; (v)
(xxxviii) “unborn” means a human foetus conceived [Link] not born. (xxiii)
(2) For the purposes of’ entering into a long-term polil y the life of an unborn shall be
deemed to begin at conception.

Part I 15

Administration of Act

Registrar of Long-term Insurance

2. ( 1 ) There shall be a Registrar of Long-term tnsur-a:lce with the powers and duties
conferred on or assigned to the Registrar by or under this Act or any other law.
(2) The executive otlicer of the Board shall be the Registrar. 20
(3) The powers and duties of the Registrar maybe exel cised and shall be carried out—
(</ ) personally by the Registrar;
(h) by mother member of the executive of the Board authorised thereto by the
Registrar or, in the Registrar’s absence for any reason, the Board; or
(() by any person who has been appointed by the Board for that purpose and who 25
htts been authorised to do so under his or her c(mtro] by the Registrar, or by the
member referred to in paragraph (b), to the extt nt and subject to the conditions
determined, either generally or in any particular case, in that authorisation.
(4) Any decision or action taken by a person referred .O in subsection (3)(b) or (c) in
the exercise of any power or carrying out of any duty of the Registrar shall, for the 30
purposes of this Act or any other law, be deemed to ha] e been taken by tbe Registrar.

General provisions concerning Registrar

3. ( 1 ) An approval of, or a determination or decision k y, or a notice to be given by or

to, the Registrar, shall, without derogating from legal rules on the making known or the
publication thereof, be valid only if it is in writing. 35
(2) Whenever the approval of, or a determination or c ecision by, or the performance
of any other act by the Registrar, is sought by a person t rider this Act or any other law,
application therefor shall be made in writing to the Registrar and the application shall—
(c) be made in the form the Registrar requires; ard
(b) be accompanied by— 40
(i) the fees prescribed by the Registrar; and
(ii) the information or documents which the Registrar requires.
(3) If a person with an interest in the matter is [Link] by a determination made,
decision taken or act performed in the exercise or carrying out of the powers or duties of
the Registrar, that person may appeal to the board of appeal established by section 26 of 45
the Financial Services Board Act, with the necessary changes, in accordance with that
sect ion.
14 N{). 19276 GOVERNf IENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52.1998 LONG-TERM INSURA N’CE ACT. 1998

(4) A person may, upon payment of the fees prescribed by the Registrar, inspect only
those documents prescribed by the Registrar, after consultation with the Advisory
Committee, which are held by the Registrar under this Act in relation to a long-term
insurer or obtain a copy of or extract from any such document.
(5) A document which purports to have been certified by the Registrar as a document 5
held in the Registrar’s otlice or to be a copy of such a .locument, shall be prima facie
proof of the content of such a document or copy, and shall be admissible in evidence in
any proceedings.

Special provisions concerning Registrar and his or t er powers

4. ( I ) When anything is required or permitted to bc done under this Act within a lo

particular period, the Registrar may, before the expiry ( lf that period, extend it.
(2) The Registrar may by notice direct a long-term insurer to furnish the Registrar,
witbin a specified period, with specified information or documents required by the
Registrar for the purposes of this Act.
(3) If any advertisement, brochure or similar document which relates to the business 15
of a long-term insurer, or to a long-term policy, and which is being, or is to be, published
by a person, is misleading or contrary to the public iliterest or contains an incorrect
statement of fact, the Registrar may by notice direct th:it person not to publish it or to
cease publishing it or to effect the changes to it which }.he Registrar deems tit.
(4) If the Registrar has reason to believe that a persm is contravening or failing to ~()
comply with a provision of this Act, the Registrar may b!. notice direct that person or any
other person to—
(a) furnish the Registrar within a specified period with any specified information
or documents in the possession or under the C(J ntrol of that person which relate
to the matter; 25
(b) appear before the Registrar at a specified time :md place in connection with the
mat ter.
(5) (a) If a person contravened or is contravening ection 7(1 )(a) of this Act, the
Registrar may—
(i) by notice direct that person to make arrangemc nts satisfactory to the Registrar 30
to discharge all or any part of the obligations under long-term policies already
entered into by that person; or
(ii) apply to the Court for the sequestration or Iiql lidation of that person, whether
he: she or it is solvent or not, in accordance \ /ith—
(au) the Insolvency Act, 1936 (Act No. 2401 1936); 35
(bb) the Companies Act;
(cc) the Close Corporations Act, 1984 (Act No. 69 of 1984); or
(old) the law under which that person is incor~orated,
as the case may be.
(b) In deciding an application contemplated in parag~”aph (a)(ii), the Court— 40
(i) may take into account Whether the sequestration or liquidation of the person
concerned would be in tbe interests of the policyholders concerned;
(ii) may make an order concerning the manner in which claims maybe proven by
policyholders; and
(iii) shall (if necessary) appoint as trustee or liquic ator a person nominated by the 45
Registrar.
(6) Notwithstanding anything to the contrary in .my law or the common law
contained, but subject to the provisions thereof relatin~. to jurisdiction, procedure and
evidence in relation to a Court, the Registrar shall have L right of appearance to institute
and conduct any proceedings in a Court if it is reasonal~ly necessary— 50
(a) to discharge any duty or responsibility assign ~d to the Registrar by this Act;
(b) to compel any person to comply with or to cease contravening this Act;
(c) to compel any person to comply with a lawful request, directive or instruction
made, issued or given by the Registrar under this Act;
I () N(), I 9270 GOVERN) IENT GAZETTE. 23 SEPTEMBER 1998

Act N(I. 52, 1998 [Link]-TERM INS [Link] ACT, 1998

((l) to obtain a declaratory order concerning any })oint of law relating to this Act
or to long-term insurance business generally; or
(e) in connection with any matter relating to long-term insurance business
generally where the Registrar considers it to I )e in the public interest,
subject to such additional procedural requirements as [h: Court may order in each case 5
w) as to ensure ftiir and equi[able judicial process.
(7) The Registrar may-
determine that a policy or policies shall form part of a particular class of
policies detined in section I of’ this Act or n section I of the Short-term
Imsurance Act, 1997, if a long-term insurer has not classified that policy or 10
policies correctly into the appropriate class, and when the Registrar so
determines, the policy or policies concerned $ hall be deemed to form part of
the class of policies so determined for the plrposes of, and subject to, the
provisions of the said Act relating to that class of policies; or
upon application of a long-term insurer, determine that a policy or policies 15
forming part of any class of policies definec’ in section I of this Act or in
section 1 of the Short-term Insurance Act, 19! 7, shall form part of a different
class of policies defined in the said sectior 1 of this Act, and when the
Registrar so determines, that policy or policif s shall for the purposes of this
Act be deemed to form part of the class of poliLies so determined and it or they 20
shall-
(i) be subject to al] the provisions of this Act ‘elating to that class of policies;
(ii) be subject to the conditions determined by the Registrar; and
(iii) notwithstanding paragraph (a), be excrn;ned from the provisions of the
rcgulutions to the extent determined by [he Registrar: 25
Provided that the Registrar shall not make a determinatmn under this subsection if the
Registrar is satisfied that the determination will be prejudicial to any person or will
defeat any object of this Act.

Annual report

5. ( 1 ) The Registrar shall submit to the Minister a report on the Registrar’s activities 30
under this Act during each year ending 3 I December, and shall furnish any additional
information relating to anything done by the Registrar under this Act that the Minister
may require.
(2) A copy of the report submitted to the Minister in lerms of subsection (1) shall be
tabled in Parliament within 30 days after receipt of the report if Parliament is then in 35
session or. if Parliament is not then in session, within 3(’ days after the commencement
of’ its next ensuing session.

Advisory Committee on Long-term Insurance

6. ( I ) There shall be an Advisory Committee on Lon~ -term Insurance which may cm

its own initiative, or shall at the request of the Minister or Registrar, investigate and 40
report or advise concerning tiny tnatter relating to long-term insurance.
(2) The Advisory Committee shall consist of a ch,iirperson and other members,
appointed by the Minister after consultation with the Bt)ard.
(3) A member of the Advisory Committee shall hold office for the period determined
by the Minister when the appointment is made. 45
(4) A member of the Advisory Committee who is not in the full-time employment of
the S[ate or the Board shall be paid the remuneration ar d allowances in respect of any
expenses incurred in the performance of the function; of the Advisory Committee,
determined by the Board.
(5) The Advisory Committee may meet or otherwise arrange for the performance of 50
its functions, and may regulate its meetings as it thinks fit, after consultation with the
Board.
(6) The expenditure connected with the functions of the Advisory Committee shall be
 lx ?-4{). 19270 (io VtRN 4ENT GAZETT1:. 23 SEPTEMBER 199X

Act No. 52, 1998 I. ON[;-TERM [NSLIRA ,NCE A(<T, 199X

paid out of the funds of the Board, whose appr{)val shal be required for all expenditure
proposed to be incurred, or actually incurred. hy the A[lvisory Committee.
(7) The Advisory Committee shall have the powers w d carry out the duties conferred
{m or assigned to it by or under this Act.

Part II 5

Registration of long-term insurers

Registration required in order to carry on long-term insurance business

7. ( 1 ) No person shall cw-ry on any kind of’ long-term insurance business, unless that
person-
(a) is registered or deemed to be registered :-s a long-term insurer, and is IO
authorised to carry on the kind of long-term insurance business concerned.
under this Act; and
(l)) carries on that business in accordance with tk is Act.
(2) Subsection ( I ) shall not apply tc~—
((1) a pension fund organ i~.ation registered uncle, the Pension Funds Act, 1956 Is
(Act No. 24 of 1956), if and in so far as it at’s in accordance with that Act:
(h) a friendly society registered under the Friend. y Societies Act, 1956 (Act No,
25 of 1956), or exempted under section 3(2) (f’ that Act from the requirement
to be so registered, ii’and in m Jar ;]s it enters i]lto long-term policies in respect
of any of which— 20
(i) the value of the policy benelits. other [hao an annuity, to be provided; or
(ii) the mount ot’ the premium in return ‘m- which an annuity is to be
provided,
does not exceed R5 000” per member or ano[hc r maximum amount prescribed
by the Minister: 25
((’) a fund established in terms of an agreement referred to in section 23 of the
Labour Relations Act, 1995 (Act No. 66 of 1995), if’ and in so far as it acts in
accordance with the provisions of such agreement;
a medical scheme registered under the Mediciil Schemes Act. [967 (Act No,
72 of 1967), if and in so tar as it ac(s in accordance with that Act: 30
the Land and Agricultural Bank O( South Alri( a referred to in section 3 of the
Land Bank Act. 1944 (Act No. 13 of 19441, if and in so far as it acts in
accordance with that Act:
a short-term insurer, it’ and in so far as it enters into a policy which it is entitled
to enter into by virtue of its registration as a ~ hort-term insurer; or 35
an agricultural co-operative or special farnlers’ co-opertitive formed and
incorpor~ited under the Co-operatives Act, lW 1 (Act No. 9 I of 1981 ), if and
in so far m it provides, under a scheme or arrattgement in terms of its statutes,
benefits the amount of which is not guarante xl and in respect of which its
liability is limited to the amount standing to the credit of a fund specially 40
maintained for that purpose.
(3) For the purposes of this” section a person shall, in the absence of evidence to the
contrary, be deemed to be carrying on long-term insurw ce business in the Republic, if
that person performs any act in the Republic—
(a) the object or result of which is that another Ierson will enter into or enters 45
into, or ofiers to enter into or to vary, a l~mg-term policy, other than a
reinsurance policy, in terms of which the first-rlentioned person undertakes to
provide policy benefits to the other person; or
(b) in relation to a long-term policy, other than a reinsurance policy, in terms of
which that person has undertaken to provide p ~licy benefits, and which act is 50
aimed at-
(i) maintaining, servicing or surrendering, I )r otherwise dealing with, the
long-term policy;
(ii) collecting or accounting for premiums payable under the long-term
policy; or 55
20 N(). 19?70 (; OVERh VENT GA2WTE, 23 SEPTEMBER 1998

Ad No. 52, 1998 1,( )N~-TERhl [NSUR,’,NC’E ACT. 1998

( iii) receiving or submitting of. or assi$ting or otherwise dealing with the

setllernen[ of. a claim under the Iotlg-te m policy.

Prohibition on use of certain words, or performal Ice of certain acts, by certain

persons

8. ( I ) No person shall- 5
the Short-term insurance Act, 1998, without the
sll~ject to section X ( 1 )((r) of
approval ot’ [he Registrar apply to his. her (w its business or undertaking a
name or description which includes the word “insure”, “ilssure” or
“underwrite” or any derivative [hereof. unlxs he, she or it is a long-term
insurer; or lo
pcrlorm any act which indicates that he, she (jr it carries on or is authorised to
carry on Ion, g-term insurance business, unl~ss be, she m it is a lorlg-terrn
insurer authorised to carry on that business.
(2) N() Iorlg-term insurer shall change its name w thout the prior approval (~t’ the
Registrar, Is
(3) NO person shalt perform any act the object of w’rich is or which results in—
(a) ano(her person entering into or offering to en:er into a long-term policy. other
than a reinsurance policy, to which a Iong-te m insurer is not a party; or
(/,) (i) the surrendering t)l, or collecting 01 t)r at:countin.g for premiums payable
under; ~~
(ii) the receiving or submitting of, or assisting or otherwise dealing with, the
settlement 01 a claim under: or
(iii) the maintaining, servicing or otherwise dealing with,
a I(mg-term policy, other than a reinsurance policy. to vhich a long-term insurer is not
a party. without the consent of’ the Registrar. given ei:her generally or in a particular 2s
CilSt3,

Application for registration

9. ( 1 ) A person who wishes to carry on long-term insurance business shall apply to the
Registrar for registrti[ion as a long-term insurer.
(2) Subject to subsection (3). the Registrar- 30
(a) may grant an application made in terms o} subsection ( 1 ) on such of the
conditions conternpkrted in section 10 as the Registrar may determine: and
(/)) shall. if the Registrar grants such application, register the person concerned as
a long-term insurer and issue to that person a +’ertificate of registration, in such
form as may be prescribed by the Registrar, allthorising that person to carry on 35
the long-term insurance business concermx and specifying {he conditions
contemplated in parograph ((/).
(3) An application referred to in subsection ( 1 ) shall r ot be granted by the Registrar—
(~~) unless the an~lican-
..
(i) is a public company and has the carrying on of long-term insurance 40
business as its main object; or
(ii) is incorpomted without a share capital u,lder a law providing specifically
for the constitution of a person to ctirry ,m long-term insurance business
as its main object;
(/)) if— 45
(i) the applicant does not have the tinarjcial resources, organisation or
management thiit is necessary and ade(luate for the carrying on of the
business concerned;
(ii) any person who is, or will, from the da e of proposed registration, be a
director or managing executive of the applicant is not tit and proper to 50
hold the oflice concerned;
(iii) the direct or indirect control of the appli :ant by another person, whether
by virtue of shareholding, voting power the power to appoint directors,
or in any other manner, will be contrary :0 the interests of policyholders:
22 N(), 1927(1 (; OVERN Wt3N”r GAZETTE. 23 SEPTEMBER 1998

,\ct N(). 52. 1998 I. ONG-TERL1 lNSUR/ NCE ACT. 1998

(iv) [he applictint is not, or will not be, able to comply with this Act; or
(v) the registration is contrary to the public interest;
(~) if the proposed name ot’ [he a p p l i c a n t , or a translation, shortened form or
derivative thereof, is unacceptable because ii —
(i) is identical to that of another long-term insurer or a short-term insurer; 5
( ii) so closely resembles that O( another long-term insurer or a short-term
insurer that the one is likely to be mistaken for the other;
(iii) is identical to that under which another l~mg-term insurer or a short-term
insurer was previously registered and reasonable grounds exist for
objection to its use by the applicant concerned; or 10
(iv) is misleading or undesirable,
unless the applicant has undertaken to adopt, within such period as the
Registrar may determine, another name whi~h is acceptable to the Registrar.

Conditions of registration

10. The conditions contemplated in section 9(2)((7) r lay include conditions- Is

((/) authorizing the long-term insurer to enter int( only certain long-term policies
determined by the Registrar;
(17) auth(misin.g the long-term insurer to enter irr:o long-term policies other than
certain long-term policies determined by the Registrar:
(c) authorizing the long-term insurer to enter nto certain long-term policies Z()
determined by the Regis[rar only it’ those policies contain, or do not contain,
particul:ir terms or conditions determined by the Registrar:
((/) limiting the armmnt or value of’ the policy benefits to be provided by the
long-term insurer under cerlain long-tern. policies determined by the
Registrar to an amount (w value determined by the Registrar; 25
((’) limiting the amount of the premiums that the long-term insurer may contract
to receive, durirlg a peri(xl determined by the Registrar, in respect of till or
certain long-term policies determined by the Registrar that may be entered
into by that long-term insurer during that period;
(f) requiring the long-term insurer to enter into reinsurance policies in terms of 30
which that long-term insurer reinsores at Ie:ist a portion determined by the
Registrar of’ the liabilities incurred by it in hmns of all or certain long-term
policies determined by the Regis[rar (hat may be entered into by that
long-term insurer during a period determineti by the Registrar;
(x) requiring that the provisions of the memorar-uiurn and articles of association, 35
(w equivalent constitution. of the long-term insurer must be suitable to enable
it to carry on long-term insurance business; ( r
(h) reasonably necessary to ensure that the long-term insurance business
concerned is carried on soundly and in a t loanner whereby the long-term
insurer will be in a position to meet i(s liabilities, 40
and dit~erent conditions ITlay be determined in respect of different long-tel-m insurers.

Variation of registration conditions

11. ( I ) The Registrar may-

upon application of a long-term insurer and hilving regard, with the necessary
changes, to section 9(3)(} 1); 45
when acting in accordance with section 12(2) or (3) or when giving an
authorisation in accordance with section 35( ‘?)(a) in relation to a long-term
insurer; or
if a long-term insurer has ceased to enter nto certain long-term policies
determined by the Registrar to an extent which no longer justifies its 50
continued registration in respect of those pol ties, and the long-term insurer
24 No. [9276 GOVERN] 4ENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

has been allowed at least 30 days in which to make representations in respect

of the matter,
by notice to the long-term insurer vary a condition, } ubject to which the long-term
insurer is registered or deemed to be registered, by amending or deleting it, or determine
a new condition contemplated in section 10. 5
(2) The Registrar shall, if a variation referred to in subjection ( 1) is effected, withdraw
the certificate of registration issued in terms of section 9 and issue, as contemplated in
that section, a new certificate of registration to the lonp-term insurer concerned.

Registrar may under certain circumstances prohibit long-term insurers from

carrying on business 10

12. (1) If a long-term insurer—

(a) has not furnished all information which is m:.terial to an application made to
the Registrar under this Act or has furnished reformation which is false;
(b) (i) has made a material misrepresentation to members of the public in
connection with the long-term insurance business carried on by it; 15
(ii) has failed to comply with a material cmdition subject to which it is
registered or deemed to be registered as a long-term insurer;
(iii) has contravened or failed to comply with a material provision of this Act,
and has thereafter, within a period determii~ed by the Registrar, failed to
remedy such conduct to the satisfaction of th; Registrar; or 20
((-) were it then to apply for registration in terms of section 9, would not be able
to satisfy the Registrar as to the matters refer -ed to in section 9(3)(b)(i), (iii)
or (iv),
the Registrar may give notice to the long-term insurer I lf the Registrar’s intention, and
of the reasons therefor, to prohibit that long-term insurer, with effect from a date 25
specified in the notice, from carrying on the long-term insurance business specified in
that notice.
(2) When the Registrar has given notice to a long-krm insurer in accordance with
subsection (1), and has allowed that insurer at least 30 days in which to make
representations to the Registrar in respect of the matter, the Registrar may, by notice to 30
the long-term insurer—
(a) withdraw the first-mentioned notice;
(b) act in accordance with section 11; or
(c) if it is appropriate and if the Minister has authf Irised the Registrar in writing to
do so, prohibit the long-term insurer fron I carrying on such long-term 35
insurance business as the Registrar may specify in the notice, and which has
been specified in the first-mentioned notice.
(3) When the Registrar has, in accordance with subsei tion (2), prohibited a long-term
insuier from carrying on certain long-term insurancl: business, the Registrar may
thereafter— 40
(a) withdraw the prohibition by notice to the Ion;: -term insurer;
(b) act in accordance with section 11(I) and thereupon, by notice to the long-term
insurer, withdraw the prohibition and authorise the long-term insurer to carry
on the long-term insurance business, subject to the conditions determined by
the Registrar, specified in the new certificate: of registration referred to in 45
section 11 (2); or
(c) act in accordance with section 13(2)(c), $1(2) or 42(2), according to
whichever provision the Registrar deems m ~st appropriate in the circum-
stances and in the interests of the policyholders of the long-term insurer.

Termination of registration 50

13. (1) If a long-term insurer fails to commence ths carrying on of its long-term
26 IN{) I ~)270 GOVERP MENT GAZETTE, 23 SEPTEMBER 199X

Act No. 52, 1998 [Link]-TERM lNSUR \NC13 ACT. 1998

insurance business within a reasonable period after beirg registered to do so, and if, after
ullowing that insurer at least 30 days in which to make representations in respect of the
matter, the Registrar is satisfied that the long-term insurer will not commence the
corrying on of such business within a reasonable period thereafter, the Registrar shall, by
m~tice to the long-term insurer, cancel its registration. 5
(2) The Registrar shall—
ii a long-term insurer has ceased to enter into long-term policies to an extent
which no Iongerjustifies its continued registration as a long-term insurer and,
after allowing that insurer at least 30 days in which to make representations in
respect of the matter, the Registrar is satislied that it will not resume the 10
entering into of long-term policies to the required extent within a reasonable
period thereafter:
if’ a long-term insurer has notified the Registri r of its intention to cease to enter
into any more long-term policies and has refluested so in writing; or
if the Registrar considers it appropriate to a :t so in accordance with section 15
12(3)(C),
by notice direct the long-term insurer concerned, with t ffect from a date specified in the
notice, not to enter into any more long-term policies arx require it to make arrangements
satisfactory to the Registrar to discharge its obligati( ns under all long-term policies
entered into before the specified date and, when the Registrar is satisfied that the 20
long-term insurer concerned no longer has any obligatims under any such policy, shall,
by notice to the long-term insurer and in the G{tze[te, cancel its registration.
(3) When zlll of the long-term insurance business of a long-term insurer has been—
(a) discontinued as a result of its amalgamation with, or its transfer to, ano[her
long-term insurer as contemplated in Part V: or 25
(h) wound up as contemplated in Part VI,
the Registrar shall by notice in the Ga:et[e cancel its registration.

Reregistration of long-term insurers as companies

14. For the purposes of section 73(5) of the Compan]es Act in relation to a long-term
insurer, the reference to the Registrar of Companies in Lhat section shall be construed as 30
a reference to the Registrar of Companies acting in concurrence with the Registrar.

Part 111

Business and administration of long-term insurers

Limitation on business

15. (1) A long-term insurer shall not carry on such bllsiness, other than the long-term 35
insurance business which it is authorised to carry on b! virtue of its registration under
section 9, as the Registrar has prohibited in relation to-
(a) a particular long-term insurer; or
(b) long-term insurers generally.
(2) A long-term insurer shall not carry on such xrsiness as the Registrar may 40
determine, other than the long-term insurance business .vhich it is authorised to carry on
by virtue of its registration under section 9, otherwise than in accordance with and
subject to the limitations and conditions which the Registrar may determine in relation
to-
(d) a particuktr long-term insurer; or 45
(b) long-term insurers generally.
(3) The Registrar may only impose a prohibition (r determine a limitation and a
condition under subsection ( 1 ) or (2) by notice in the ( kcet[e-
(a) if it is in the interests of the policyholders of; particular long-term insurer, or
long-term insurers in general, to act so; 50
28 ?4(1. 19276 GOVERF ‘MENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM lNSUR 3NCE ACT, 1998

(b) after giving at least 30 days’ notice of the Registrar’s intention to act so in the
case of-
(i) a particular long-term insurer, to that h rig-term insurer; or
(ii) long-term insurers generally, in the Ga :ette; and
(c) after considering any representations receiw :d in respect of the matter. 5
(4) A long-term insurer, other than an insurer carryi fig on reinsurance business only,
shall not be a short-term insurer as defined in the Sho~t-term Insurance Act, 1998.

Head office and public otficer

16. ( 1 ) A long-term insurer shall—

(a) have its head office in the Republic; 10
(b) appoint a natural person who is permanently resident in the Republic as its
public officer;
(c) notify the Registrar of the address of that he zd office and of the name of that
public officer; and
(d) if the address of that head office changes, or if that public officer or the name 15
of that public officer changes, notify the Reg: strar thereof within 30 days after
such change.
(2) The public officer shall, as far as it is in his or her power, ensure that the long-term
insurer complies with this Act.
(3) Process in any legal proceedings against a long-t :rm insurer maybe served at the 20
head office of that insurer or, if no such office is in [Link], by service upon the public
ofticer or, if he or she cannot be found or if no perst m has been appointed as public
otlicer, by service upon the Registrar, which shall be deemed to be service upon the
long-term insurer.

Financial year 25

17. A long-term insurer may not change its financial year without the approval of the
Registrar.

Notification of certain appointments and terminations

18. A long-term insurer shall notify the Registrar, in the form and of the information
required by the Registrar, in respect of every director ( r managing executive appointed 30
by it or whose appointment has been terminated b} it, witbin 30 days after such
appointment or termination, together with the reasons for any such termination.

Auditor

19. ( 1 ) A long-term insurer shall from time to time a!jpoint, and at all times have, one
or more auditors. 35
(2) No appointment of an auditor, other than a reapp( ,intment not involving a break in
the continuity of the appointment, shall take effect umess it has been approved by the
Registrar.
(3) A long-term insurer shall not appoint as its auditor—
(a) one of its directors; or 40
(b) a person who is not engaged in public practi ;e as an auditor.
(4) If an auditor of a long-term insurer is a firm (as contemplated in the Public
Accountants’ and Auditors’ Act, 1991 (Act No. 80 of 1991 )), the last approval of the
Registrar for the appointment thereof shall not Iapsc by reason of a change in the
membership of the firm if at least half of the members, after the change, were members 45
when the appointment of the tirm was last approved b:{ the Registrar.
(5) Notwithstanding anything to the contrary in any law contained, the auditor of a
long-term insurer shall—
(a) whenever the auditor furnishes copies of i report or other document or
30 N(,, 19276 GOVERN tiENT GAZETTE, 23 SEtTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURI NCE ACT. 1998

particulars contemplated in section 20(5)(b) of the Public Accountants’ and

Auditors’ Act, 1991, also furnish a copy ther!:of to the Registrar; and
(b) if the auditor’s appointment is terminated fol any reason—
(i) submit to the Registrar a statement of wltat the auditor believes to be the
reasons for that termination; and 5
(ii) if the auditor would, but for that termination, have had reason to submit
to the long-term insurer a report contemplated in section 20(5)(u) of the
Public Accountants’ and Auditors’ Act, 1991, submit such a report to the
Registrar; and
(c) inform the Registrar in writing of any matt:r relating to the affairs of the 10
long-term insurer of which the auditor became aware in the performance of
the auditor’s functions as auditor and which, i,l the opinion of the auditor, may
prejudice the insurer’s ability to comply with section 29(1) of this Act.
(6) (a) The furnishing, in good Faith, by an auditor of a report or information in terms
of this section shall not be deemed to constitute a contrilvention of a provision of a law 15
or a breach of a provision of a code of professional t onduct to which the auditor is
subject.
(b) The failure, in good faith, by an auditor to furnish a report or information in terms
of this section shall not confer upon any person a rig, ]t of action against the auditor
which, but for that failure, that person would not have lad. 20
(7) In addition to the duties assigned to the auditor of a long-term insurer by the Act
under which that insurer is incorporated or by the Public accountants’ and Auditors’ Act,
1991, the auditor shall—
(a) in relation to a statement forming part of the returns in respect of which the
auditor is required to do so in terms of sectio:l 36, examine that statement or 25
part thereof and satisfy himself, herself or itself that it is properly drawn up so
as to comply with the requirements of this Act and express an opinion as to
whether the statement or part thereof, including any annexure thereto,
presents fairly the matters dealt with therein ?.s contemplated in section 20 of
the Public Accountants’ and Auditors’ Act, 1(;91; and 30
(b) carry out the other duties provided in this Ac: or prescribed by the Minister.
(8) Without derogating from an auditor’s right to do so in respect of anything which
is material to the carrying out of the auditor’s duties, an auditor shall not be required to
examine or express an opinion in relation to a statement forming part of a return, report
or certificate or to the particulars thereof, in respect (If which a statutory actuary is 35
required, in terms of this Act to make an examination, f ive an attestation or express an
opinion.
(9) An auditor may rely on the work performed by tht statutory actuary in relation to
the financial affairs of a long-term insurer, when the auditor expresses an opinion in
relation to the financial affairs of that long-term insurer ,n terms of this Actor any other 40
law, subject to compliance with the prevailing auditing standards.

Statutory actuary

20. ( 1 ) A long-term insurer shall from time to time aFpoint, and at all times have, an
actuary.
(2) A long-term insurer may appoint an alternate to .lct in the place of its statutory 45
actuary during his or her absence for any reason.
(3) No person other than a natural person who is permanently resident in the Republic,
is a Fellow of the Actuarial Society of South Africa and has, as an actuary, appropriate
practic~il experience relating to long-term insurance bu ;iness, shall be appointed as a
statutory actuary or his or her alternate. 50
(4) No appointment of a statutory actuary or his or her :dtemate shall take effect unless
it has been approved by the Registrar.
j? N,). 19276 GOVERN. MENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 199tl LONG-TERM INSUR, \NCE ACT, 1998

(5) The statutory actuary of a long-term insurer sha; l—

(a) submit t: the Re~istrar, if ~is or her appointment is for any reason terminated,
a statement of what he or she believes to be he reasons for that termination;
and
(b) report to the long-term insurer any matter relating to the business of the 5
long-term insurer-of which he or she became aware in the performance of his
or her functions as statutory actuary and which, in the opinion of the statutory
actuary, may prejudice the long-term insurer’s ability to comply with section
29( 1), and if steps to rectify the matter are m t taken to the satisfaction of the
statutory actuary, he or she shall forthwith rt port the matter to the Registrm. 10
(6) (a) The furnishing, in good faith, by a statutory a;tuary of a report or information
in terms of subsection (5) shall not be deemed to constitute a contravention of a
provision of a law or a breach of a provision of a code (If professional conduct to which
he or she is subject.
(b) The failure, in good faith, by a statutory actuary t) furnish a report or information 15
in terms of this section shall not confer upon any per: on a right of action against the
statutory actuary which, but for that failure, that perso I would not have had.
(7) In addition to duties assigned to the statutory act Jary by any other law or a code
of professional practice, the statutory actuary shal l—
(a) in relation to a statement forming part of the returns in respect of which he or 20
she is required to do so in terms of section 36, examine that statement and
satisfy himself or herself that it is properly dr,iwn up so as to comply with the
requirements of this Act and attest or, as the ~ ase may be, express an opinion
in connection with that statement: and
(b) carry out the other duties provided in this Act or prescribed by the Minister. 25
(8) A statutory actuary shall—
(a) have the right ~~f access at all times to the acc(.mnting records and other books
and documents of the long-term insurer and be entitled to require from the
directors or officers of that insurer the inform~ltion and explanations he or she
deems necessary for the carrying out of his or her duties; 30
(h) be entitled to—
(i) attend a general meeting of the Iong-tertn insurer;
(ii) receive the notices and other commw tications relating to a general
meeting which a member of that long-term insurer is entitled to receive;
and 35
(iii) be heard at a general meeting on the lmsiness of the meeting which
concerns him or her as statutory actuary

Appointment of auditor or statutory actuary by Registrar

2L ( 1 ) If a long-term insurer for any reason fails to lppoint-

(a) an auditor in terms of section 19(I), the [Link] may, notwithstanding 40
sections 269(4) and 271 ( I ) of the Companies Act, but subject to section 19 of
this Act, appoint an auditor for that long-term’ insurer;
(b) an actuary in terms of section 20(l), the Regitrar may, subject to section 20,
appoint an actuary for that long-term insurer.
(2) A person [lr firm appointed under subsection ( I ) as auditor or actuary of a 45
long-term insurer shall be deemed to have been appointed by the long-term insurer in
accordance with this Act.

Removal of appointees who are not fit and proper

22. ( I ) The Registrar may by notice require a Ionf,-term insurer to terminate the
appointment of a director, managing executive, publ]c officer, auditor or statutory 50
actu:iry of that long-term insurer, if the person or firm C( ncerned is not fit and proper to
hold the office cor-~erned.
J .4 ,N(), 1027(1 (; OVP:RP MINT GAZETTE, 23 SEPTEMBER 1998

,fct No. 52.1998 I. ONG-TERM INS(JR \NCE ACT. 1998

(2) When the Registrar intends to act as crmtemplate:.1 in subsection ( I), the Registrar
shall give notice to the long-term insurer concerned, an.j, unless it is impracticable to do
so, to the person or firm concerned, of the Registrar’s irtention and the reasons therefor,
and (he person m tirm concerned shall thereupon ceasl. to perform the functions of the
office concerned pending the final outcome of any action under subsection (3). 5
(3) When notice has been given to a long-term insurer in terms of subsection (2), that
long-term insurer and the person or firm concerned m, Iy appeal to the board of appeal
established by section 26 of the Financial Services Board Act, with the necessary
changes, in accordance with that section, and any party ,hall have a right of appeal to the
Court against the decision of that botircl of’ appeal as if it were a judgment of a lower 10
court,

Audit committee

23. ( I ) The board of directors of a long-term insurer f hall appoint an audit committee
of at least three members of whom at least two shall bc members of that board.
(2) The majority of the members, including the chairperson of the audit committee, Is
shall be persons who ore not employees of the long-tel m insurer.
(3) The functions of an audit committee shall, infer ~lia. be—
((i) to assist the board of directors in its evaluation of the odequacy and efficiency
of the internal control systems, accounting pri ctices, information systems and
auditing and uctuarial valuutioo processes app]ied by the long-term insurer in 20
the day-to-day management of its business;
(b) to facilitate and promote communication anc liaison concerning the matters
referred to in paragraph (a) or a related matter, between the bored of directors
and the managing executive, auditor, statutm-~ actuary and internal audit staff
of the long-term insurer; ‘)5
(c) to recommend the introduction of measures which the committee believes
mtiy enhance the credibility and objectivity of financial statements and reports
concerning the business of the long-term insurer: and
([i) to advise on a matter referred to the committ~e by the board of directors.
(4) [t’ the appointment of an mrdit committee is, in a part]ctdar case, inappropriate or 30
impmctical or would serve no useful purpose, the Registrar may, subject to such
conditions as the Registrar may determine, exempt th: long-term insurer concerned
from the requirements of subsection ( I).

Preference shares, debentures, share capital and shdre warrants

24. A long-term insurer shall not- 35

(a) without the approval of the Registrar or otherv ise than in accordance with the
conditions that the Registrar determines—
(i) issue any debentures;
(ii) issue preference shares other than pr >ference shares compulsorily
convertible to ordinary shares; 40
(iii) convert any of its shares into preference shares;
(iv) convert any of its preference shares of a >articuiar class into preference
shares of another class;
(v) convert any of its shares, including preference shares, into debentures:
(vi) reduce its share capital in terms of [Link] 83 and 84 of the Companies 45
Act;
(b) notwithstanding sect ion 10 I of the Companit’s Act, issue share warrants to
bearer as contemplated in that section.

Registration of shares in name of nominee

25. ( 1 ) A long-term insurer shall not knowingly- 50

(~i) allot or issue any of its shares to, or register a! y of its shares in the name of,
a person other than the intended beneficial sh: reholder;
?7(> N(1. 1927(1 GOVIK” MENT GAZETTE. 23 SEPTEMBER 1998

Act No. 52, 1998 [.ONG-TERM INSUR \NCE ACT. 199X

register transfer of any of’ its shores to a person other than the intended
(}),)
beneficial shareholder,
without the approval of the Registrar.
(2) Subsection ( 1 ) shall not apply to the allotment, i wue or registration of the shares
of a long-term insurer— 5
((J) to or in the natne of a trustee of a unit trust scheme as defined in section I of
the Unit Trusts Control Act, 198 I (Act No. 54 of 1981), or of a nominated
company of the trustee approved by the Registrar of Unit Trust Companies;
(b) to or in the name of any executor, [Link], trustee, curator, guardian or
liquidator in the circumstances contempl ited in section 103(3) of the 10
Companies Act;
((’) for a period of not more than six months, to c r in the name of a stockbroker or
a company floated by a stockbroker for the r urposes contemplated in section
12( I )(s) of the Stock Exchanges Control Act, 1985 (Act No. I of 1985), or to
or in the name of a company controlled by a long-term insurer or an employee 15
of the long-term insurer, if it is necessary that the shares be so allotted, issued
or registered in order to facilitate delivery t ) the purchaser or to protect the
rights of the beneficiary in respect ot’ those :shares:
(d) to or in the name ot’ a person acting as a dep.)sitary institution by virtue of an
authorisation under section 2 of the Safe De~-osit of Securities Act, 1992 (Act 20
No. 85 of 1992), or of a compwly contempl~ted in section 12( 1 )(r)(i) of the
Stock Exchanges Control Act, 1985: Provicied that the person or member
concerned is able, on request, to disclo:e the nzime of the beneficial
shareholder on whose behalf shares are held:
(t’) to or in the name of another person prescrib :d by the Minister. 25

Limitation on control and certain shareholding or other interest in long-term

insurers

26. ( I ) Subject to this section, no person shall, witht)ut the approval of the Registrar,
acquire or hold shares or any other interest in a Iong-t:rm insurer which results in that
person. directly or indirectly, alone or with an associ lte, exercising control over that 30
long-term insurer.
(2) No person shall acquire shares in a long-term insurer if the aggregate nominal
value of those shares, by itself or together with the aggr:gate nominal value of the shares
already owned by that person or by that person and his, her or its associates, will amount
to 25 per cent or more of the total nominal value of all of the issued shares of the 35
long-term insurer concerned. without first having obtai~ied the approval of the Registrar.
(3) The approval referred to in subsection (2)—
([~) may be given—
(i) subject to the aggregate nominal value cIf the shares owned by the person
concerned and his, her or its associates I ot exceeding such percentage as 40
may be determined by the Registrar wit lout further approval in terms of
this section;
(ii ) subject to such other conditions as the Registrar may determine;
(b) shall not be given if it would be contrary to––
(i) the public interest; or 45
(ii) the interests of the policyholders, or of persons who may become
policyholders, of the long-term insurer; and
(~) may be refused if the person concerned, alone or with his, her or its associates,
has not already owned shares in the long-term insurer—
(i) of the aggregate nominal value; and 50
(ii) for the minimum period, not exceeding 12 months,
that the Registrar may determine.
(4) If the Registrar is satisfied that the retention o“ a particular shareholding by a
particular shareholder will be prejudicial to the Iong-:erm insurer, the Registrar may
3X N(I. 1927(3 GOVI:R? MENT GAZETTE, 2.? SEPTEMBER 1998

Act N(). 52.1998 IX) NG-TERM INS(JR \NCE ACT, 1998

apply [o the CoLIrt in whose area o!jurisdiction the he,[d oflice of the long-term insurer
is situated for an order-
compelling such shareholder to reduce, wil hin a period determined by the
Court, that shareholding to a shareholding with a total nominal value not
exceeding 25 per cent of the total nominal value of all the issued shares of the 5
long-term insurer; and
limiting, with immediate effect, the voting rights that may be exercised by
such shareholder by virtue of his, her or its s“~areholding to 25 per cent of the
voting rights attached to all the issued shares of the long-term insurer.
(5) For the purposes of this section “associate”, in relation to— 0
([2) a natural person, means—
(i) his OL- her spouse;
(ii) his or her child, parent, stepchild or st,:pparent and any spouse of any
such person;
(iii) another person who has entered into ar, agreement or arrangement with 5
that natural person, relating to the acqu sition, holding or disposal of, or
the exercising of voting rights in resr ect of, shares in the long-term
insurer concerned;
(iv) a iuristic ~erson whose board of directors acts in accordance with his or
h& directions or instructions; 20
(v) a trust controlled or administered by hi n or her:
(b) a juristic person—
(i) which is a company, means its suhsidifry and its holding company and
any other subsidiary or holding compal y thereofl
(ii ) which is a close corporation registered u rider the Close Corporations Act, 25
1984 (Act No. 69 of 1984), means an! member thereof as detined in
section I of that Act;
(iii) which is not a company or a close cor~oration, means another juristic
person which would have been its subsidiary or holding company—
(m) had it been a company; or 30
(M) in the case where that othe - juristic person, too, is not a
company, had both it and that other juristic person been a
company:
(iv) means any person in accordance with wt]ose directions or instructions its
board of directors acts; 35
(v) means another juristic person whos ~ board of directors acts in
accordance with its directions or instructions;
(vi) means a trust controlled or administered by it.
(6) For the purposes of this section a person shall be deemed to exercise control over
a long-term insurer if that person, alone or with associ ~tes— 40
I (u) holds shares in the long-term insurer of which the total nominal value
represents 25 per cent or more of the nominal value of all the issued shares
thereot
(b) holds shares which entitle such person to exercise more than 25 per cent of the
voting rights attached to the issued shares of that long-term insurer; or 45
(c) has the power to determine the appointment of 25 per cent or more of the
directors of that long-term insurer, including the power—
(i) to appoint or remove, without the concurrence of another person, 25 per
cent or more of the directors; or
(ii) to prevent a person from being appointi:d as a director without another 50
person’s consent.

Furnishing of information concerning shareholders

27. ( I ) A long-term insurer shall, whenever required I o do so by the Registrar, furnish

the Registrar with a return, in the form and containing the particulars and information
which the Registrar determines, in respect of its shareholders and of any person who 55
directly or indirectly has the power to require those sha eholders to exercise their rights
40 N(I. 19~7f1 GOVERNMENT GAZETTE, 23 SEPW,MBER 1998

Act No. 52, 1998 LONG-TERM INSLJR lNCE ACT. 1998

ai shareholders in the long-term insurer in accordance with such person’s directions or

instructions.
(2) A person in whose name shares in a long-term insurer are registered, or who
wishes shares in ti long-term insurer to be allotted or issued to such person or to be
registered in such person’s name, and any person acting on behalf of such person, 5
shall. upon the written request of’ the long-term insurl:r concerned, furnish it with the
information it may require for the purposes of complying with section 25(1 ).

Effect of registration of shares contrary to Act

28. ( 1 ) No person shall—

([{) either persomdly or by proxy gmntccl to ano her person, cast a vote attached Io
to; or
(b) receive a dividend payable in respect of,
a share in a long-term insurer allotted or issued to such first-mentioned person or
registered in such person’s name contrary to this Act.
(2) The validity of a resolution passed by a long-k rm insurer shall not be atTected Is
solely by reason of a vote being cast contrary to subsection ( 1 )(u).
(3) A dividend referred to in subsection ( 1 )(h) shall be void.

Part IV

Financial arrangements

Maintenance of financially sound condition 20

29. ( 1 ) A long-term insurer shall at all times maintain its business in a financially
sound condition by—
((1) having assets;
(b) providing for its liabilities; and
(c) generally conducting its business, 25
so as to be in a position to meet its liabilities at all times.
(2) A long-term insurer shall be deemed to have failed to comply with subsection ( 1 )
if it does not have—
(a) assets as required by section 30; or
(b) in the Republic assets as required by section 31. 30
(3) A long-term insurer which fails to comply with su~section ( 1 ) shall, within 30 days
after becoming aware of it, notify the Registrar of tha failure and furnish the reasons
t here for.

Assets

30. ( I ) A long-term insurer shall— 35

(a) have assets the aggregate value of which, {n any day, is not less than the
aggregate value, on that day, of its liabilities and
(b) subject to section 32, have, in the Republi(, assets the aggregate value of
which, on any day, is not less than the aggreg: te value, on that day, of those of
its liabilities which are to be met in the Rept:blic, 40
when the values of those assets and liabilities are calct Iated by means of—
(i) the method set out in Schedule 2; and
(ii) the financial soundness method set out in Scnedule 3.
(~) A iong-term insurer shall not declare a divic,end or pay a dividend to its
shareholders if, and for as long as, it fails to compl: with subsection ( I), or if the 45
declaration or payment of the dividend would result in it failing to comply with
subsection ( I).
(3) A long-term insurer shall not declare a divic:end or pay a dividend to its
shareholders unless its statutory actuary h:ls certified d Iat the declaration and payment
thereof will not be contrary to subsection (2). 50
42 N(I. 19270 GOVEK QMENT GAZETTE, 2!3 SEPTEMBER }998

Ad No. 52, 1998 J. ONG-TERM [Link] ACT, 1998

Kinds and spread of assets

31. ( I ) Subject to section 32, a long-term insurer s’MI[, in the Republic, have assets,
other than assets in respect of linked liabilities referrx’d to in section 33(2)—
(1/) which have in aggregate value which, 01 any day, is not less than the
aggregate value, on that day, of those of its liabilities which have to be met in 5
the Republic, when the values of those assets are calculated by reference to
their market value m defined in the regulations and the values of those
liabilities, other than the said linked liabiliti!:s, are calculated by means of the
method set out in Schedule 2; and
(b) which are of the kinds specified in Schedul.: l; and 10
(c) which have a market vultte, as defined in the regulations, which, when
expressed as a percentage of the aggregate \ alue of its liabilities referred to in
paragraph (a,), does not exceed the percentage specified in the regulations in
respect of particular kinds or categories of those assets, unless the Registrtir
otherwise approves either in advance or at [Link] time after having received the 15
notice referred to in section 29(3)—
(i) in a particular case;
(ii) for the specified period; and
(iii) subject to such conditions as the Registrar may determine.
(2) Subject to subsection ( 1 ), the kinds of assets thot a long-term insurer h:ls, and the 20
spread ot those assets among different kinds, shall—
(a) to the satisfaction of the stututory actuary o)” the long-term insurer, be proper
and suitable having regard to the nature of Its various liabilities and the time
when, the ‘place where, and the manner in which, it is required, or expects to
be required, to meet those liabilities; and 25
(h} to the extent so prescribed, comply with any general requirement prescribed
by the Registrar for the appropriate matchir g of assets and liabilities.

Deeming provisions concerning assets

32. ( I ) For the purposes of sections 30 and 3 l—

((/) an asset’ot’ ~he kind specified in item 13, 16(2), (3) or (5) or 20(() of the Table 30
to Schedule 1. shall, subject to paragraph (b). be deemed to be in the Republic:
if there is documentary evidence of the title )f a long-term insurer to an asset,
that asset shall he deemed not to be in the Republic unless the documentary
evidence is in the Republic or is held outsit e the Republic in such a manner
and subject to such conditions as the Regis\rar may determine; and 35
(c) an asset shall be deemed trot to be held by ~ long-term insurer if it has been
encumbered contrary to section 34( 1 )((I) in t ~vour of another person, or if it is
held by another person contrary to section 34( I )(b), unless the person in
whose favour it is encumbered or the persol holding that asset is—
(i) the Minister of Labour or the Directol -General: Labour, or any person 40
acting on behalf of that Minister or Director-General in accordance with
the laws of the Republic relating to compensation for occupational
injuries anti diseases;
(ii) the government of any country other than the Republic in which the
long-term insurer carries on insurance business or intends to carry on 45
such business, or any person acting on ioehalf of such government, if the
long-term insurer has encumbered !hose assets in favour of, or
transferred those assets into the name of, that government or that person
in order to comply with the laws of d at country relating to long-term
insurance; or 50
(iii) another insurer and the encumbrance o] transfer takes place in terms of a
reinsurmce policy.
(2) If the assets which a long-term insurer holds in I espect of its long-term insurance
business in any of its policyholder funds include shar:s in its holding company-
44 N{), 19270 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

/\ct No. 52, 199tt [Link]-TERM lNSU)!ANCE ACT, 1998

((I) such shares shall. for the purposes of section 39(2) of’ the Companies Act, be
deemed to be held by the long-term insurer in a representtitive capacity or as
a trustee for the sole benefit of the owners of’ the policies for which the
policyholder fund concerned exists, whether the holding company is
incorporated in the Republic or not; 5
(b) such shares shall only be held by the long-term insurer with the prior approval
of the Registrar and subject to such conditio(ls as the Registrar may determine:
and
(() the long-term insurer shall not have the righl to vote at meetings of the holding
company or at meetings of any class of me nbers thereof. 10
(3) For the purposes of subsection (2) “policy holdtr fund” means a fund referred to
in paragraph (u), (b) or (c) of section 29(4) of the Income Tax Act, 1962 (Act No. 58 of
1962).

[Link]

33. ( I ) For the purposes of this Act, the liabilities o‘ a long-term insurer shall include 15
its contingent liabilities for policy benefits which have not become claimable, and which
are specified in Schedules 3 and 4.
(2) For the purposes of section 31, the linked list ilities of a long-term insurer are
those of its liabilities which, in terms of the Iong-terni policy concerned, are in respect
of policy benefits the amount of which is not guaranteed by the insurer and is to be 20
determined solely by reference to the value of partic,llar assets or categories of assets
which are specified in the policy and are actually held by or on behalf of the insurer
specifically for the purposes of the policy.

Prohibitions concerning assets and certain liabilities

34. ( I ) A long-term insurer shall not- 25

((~) encumber its assets;
(b) allow its assets to be held by another person on its behalfi
(c) directly or indirectly borrow any asset;
(d) by means of suretyship or any other form 01 personal security, whether under
a primary or accessory obligation, give security in relation to obligations 30
between other persons,
without the approval of the Registrar, given generally r in a particular case, and subject
to such conditions as the Registr-m’ may determine.
(2) A long-term insurer shall not invest in derivati~ es other than—
(~~) derivatives designated as an asset in respeot of a linked policy referred to in 35
section 33(2);
I (b) derivatives acquired out of or in respect o“ assets that are in excess of the
assets required to meet the long-term insl rer’s liabilities under long-term
policies in terms of section 30(1);
(c) for the purpose of reducing investment risk or for efficient portfolio 40
management; or
(d) in such a manner that the long-term insurer will, or reasonably expects to,
have the asset at the settlement date of ‘he derivative instrument which
matches its obligations under that instrument and from which it can discharge
those obligations. 45

Failure to maintain financially sound condition

35, ( I ) lf a long-term insurer gives notice to the Reg strar in terms of section 29(3), or
if the Registrar is satisfied that a long-term insurer is failing, or is likely to fail within a
reasonable period, to comply with section 29(1 ), the Rt gistrar may, by notice, direct th:it
long-term insurer to furnish the Registrar, within a sptcitied period, with— 50
(a) specified information relating to the nature ,md causes of the Pdilure; and
(b) its propmals as to the course of action tiat it should adopt to ensure its
compliance with section 29( 1).
46 N(), 19276 GOVER’JMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 I. ONG-TERM INS(JR ANCE ACT, 1998

(2) When the Registrar has received the informat on and proposals referred to in
subsection ( I ), the Registrar may, without derogating f:om the Registrar’s powers under
section 1 I or 12 or any other provision of this Act—
(a) authorise the long-term insurer concerned, by notice, to adopt a course of
action, approved by the Registrar after cons dering those proposals and after 5
cons u]t:ition with the auditor and the statutory actuary of the long-term
insurer, and which the Registrar is satisfied will reasonably ensure that the
long-term insurer complies with section 29( I), and the Registrar may, at that
time or at any time thereafter, after further consultation with the auditor and
the statutory actuary, by notice authorise the modification of that course of’ 10
action to the extent that the Registrar deems appropriate in the circumstances;
or
(b) if it is reasonably necessary in the interests of the policyholders of the
long-term insurer, at that time, or at wry time thereafter, and notwithstanding
any steps already taken by the Registrar in accordance with paragrzph (a) or 15
any other provision of this Act, act in accord ]nce with section 41 (2) or 42(2).

Returns to Registrar

36, A long-term insurer shall furnish the Regist,”ar with returns relating to its
business—
(c1) in the medium and form; 20
(b) containing the information; and
(c) by the date or within the period,
prescribed by the Registrar, either generally or in rela[ion to a particular insurer.
(2) If the Registrar is satisfied that a return furni ;hed to him or her in terms of
subsection ( I ) is incomplete or incorrect. he or she n];,y, by notice- 25
((1) direct the long-term insurer to furnish the Registrar, within a specified period,
with specified information or documents which the Registrar considers
necessary to complete or correct the return: (jr
(b) reject the return and require the long-term nsurer to furnish the Registrar,
within a specified period, with a new return which is complete and correct. 30

Part V

Compromise, arrangement, amalgamation, demutualisation and transfer

Court approval required for compromise, :.rrangement, amalgamation,

demutualisation or transfer

37. ( 1 ) No transaction to which a long-term insurer is a party and which constitutes an 35

agreement by which all or any part of the business of a long-term insurer is transferred
to another person. or by which a compromise, mangement or amalgamation
contemplated in Chapter XII of the Companies Act is efected, or by which a long-term
insurer which is not a company having a share capital is to be converted into a public
company having a share capital, shall have legal force without the approval of the Court. 40
(2) Any arrangement entered into between two m more insurers whereby a liability of
any long-term insurer towards policyholders is to be substituted for a liability of any
other insurer towards such policyholders (whether or rot the liability of the long-term
insurer is expressed in or created by existing policies or by new policies, or the terms of
such new policies are the same as or dimerent from the terms of the original policies), 45
shal I be deemed for the purposes of this section to be 1 scheme for the transfer of the
insurance business concerned, unless the Registrar is sat Isfied that the said policyholders
have been or will be made aware of the nature of suchs ]bstitution and have signified or
will signify their consent thereto in writing.
48 N(), i~~7(I GOVERNMENT GAZEIT’E, 23 SEPTEMBER 1998

Ad No. 52, 1998 LONG-TERM INS~J}:ANCE ACT, 1998

Application to Court

38. ( I ) When application is made to the Court tor the approval of a transaction
referred to in section 37—
(a) the parties to the transaction shall jointly—
(i) at least 60 days before lodging the application, give notice to the 5
Registrar thereof together with full particulars of the transaction;
(ii ) at least 30 days before lodging the appl cation, cause a notice, in the form
and containing the information required by the Registrar, to be published
in such official languages in the Gazefw and in such other newspapers as
the Registrar may determine; 10
(iii ) before iod~in~ the application, serve upon the Registrar a copy of the
notice of ‘m&ion, ‘and of all accompanying affidavits and other
documents relating thereto and to be t led in support of the application;
(b) a person who has an interest in the matter mi.y, by notice given to the Registrar
within 15 days after the publication in the ( ;uze?te of the notice referred to in 15
paragraph (u)(ii), submit to the Registrar su :h representations concerning the
transaction as are relevant to his, her or its interests;
(c) the Registrar may—
(i) appoint a person, at the cost of the pal ties to the transaction, to enquire
into, and report to him or her on, the desirability or otherwise of the 20
transaction; and
(ii) by notice, direct any party to the transaction to provide the Registrar or
that person with all information and do, :uments relating to the transaction
which he or she may require;
(d) the Registrar and any policyholder, sharehtdder or creditor of the long-term 25
insurer concerned may tile affidavits and other documents relating thereto and
may appear and be heard at the hearing of he application.
(2) A long-term insurer may propose, conclude or give effect to any transaction or
combination of transactions contemplated in section 37(1) notwithstanding anything
provided or not provided in the law, memorandum or other document under which any 30
party to the transaction or transactions concerned is constituted or in the articles of
association or other rules of any such party.
(3) If a long-term insurer which is not a company hi]ving a share capital applies to the
Court for approval of a transaction or combination of transactions in terms of a scheme
which proposes or is in connection with its demutuali sation, such scheme may include, 35
and the Court may approve the following matters, namely—
(a) the allotment, issue or transfer to any persc n by any party to such scheme of
shares in the long-term insurer or in a C( ~mpany which is to become the
holding company of any such party, whether in substitution for membership of
, the long-term insurer or otherwise; 40
(b) the cessation of membership of the Iong-te m insurer;
(c) the date on which such scheme takes effect which date may be a date before
or after the date of approval by the Court.

Conditions of approval

39. Notwithstanding the provisions of the Compan es Act, the approval of the Court 45
of a transaction referred to in section 37(1) shall not ‘]e granted—
(a) unless the provisions of this Part have beer complied with;
(b) if the transaction is inconsistent with this Actor contrary to the interests of the
policyholders of the long-term insurer concerned; or
(c) unless payment of the costs referred to in section 38(c)(i) has been made or 50
secured.

Approved transaction

40. ( I ) A transaction referred to in section 37( 1 ) which is approved by the Court shall
be binding on all persons and shall have effect as ordered by the Court notwithstanding
anything to the contrary contained in the constitution or rules of the parties thereto. 55
50 N(I. 19276 GOVEF NMENT GAZE’ITE. 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT. 1998

(2) Notice of the passing of a speci:il resolution (if a ly) by the members of a long-term
insurer confirming a transaction referred to in section 37(1), together with a copy of the
resolution and of the terms and conditions of the transaction, certified by the chairperson
of the meeting at which the resolution was passed and by the public officer of the
long-term insurer to be a true and correct copy shall be furnished to the Registrar by the 5
long-term insurer concerned, within 60 days of the passing of the resolution, and a
certified copy of the order of Court as soon as practicable.
(3) (u) The officer in charge of a deeds registry or other office in which is registered
any bond or movable or immovable property which is to be transferred in accordance
with a transaction referred to in section 37(1) or 70 shall, upon production by the I ()
long-term insurer concerned of the relevant bond, ti !Ie deed or registration certificate
and a certified copy of the order of Court concerned, and without payment of any duty,
tax, registration fee or other charge, make the endorsements upon the bond, title deed or
registration certificate and the entries in his or her registers that are necessary to effect
the transfer concerned. 15
(b) The exemption from the payment of any dui y, tax, registration fee or charge
contemplated in paragraph (a) shall only apply in t’~e case of a transaction resulting
from—
(i) a transfer of business compelled by law: or
(ii ) the initiative or at the direction of the Registl-ar under section 35. 20
(4) A long-term insurer which is converted into a p Iblic company in accordance with
this Part shall continue its corporate existence in the form of a public company
incorporated under the Companies Act, and the Regis rar of Companies shall register its
memorandum and articles of association in acc( rdance with section 63 of the
Companies Act. 25

Part VI

Judicial management and winding-up d’f long-term insurers

Judicial management

41. (1) Notwithstanding the provisions of the Corn panics Actor an y other law under
which a long-term insurer is incorpomted, Chapter XV of the Companies Act shall, 30
subject to this section and with the necessary chang(cs apply in relation to the judicial
management of a long-term insurer whether or nl ~t it is a company, and in such
application the Registrar shall be deemed to be a person authorised by section 346 of the
Companies Act to make an application to the Court for the winding-up thereof.
(2) The Registrar may make an application under section 427(2) of the Companies 35
Act for a judicial management order in respect of a long-term insurer if he or she is
satisfied, whether as contemplated in section 12(3) or .35(2) of this Act, or otherwise, that
it is in the interests of the policyholders of that long-term insurer to do so.
(3) In the application of Chapter XV of the Companies Act as provided by subsection
(l)— 40
(a) a reference which relates to the inability of L1 long-term insurer to pay its debts
or to meet its obligations shall be construed as relating also to its inability to
comply with the requirements prescribed by section 29(1) of this Act;
(b) in addition to any question which relates te the nature of a long-term insurer
as a successful concern, there shall be con $idered also the question whether 45
any course of action is in the interests of it; policyholders;
(c) in the following sections of the Companies Act, namely—
(i) sections 432(2) and 433(b), the refere,lce to the c~editors of a company
shall be construed as a reference also to the policyholders of a long-term
insurer; 50
(ii) sections 432(2)(e) and 433(d,), the reference to the Registrar of
Companies shall be construed as a refmence also to the Registrar:
(iii) sections 428(3), 432(4) and 433(j), tht reference to the Master shall be
construed as a reference also to the Rt’gistrar; and
y> Y{) 19270 GOVF:l NMENT GA22TI13. 23 SEPTEMBER 1998

Ad N(). 52, 1998 LONG-TERM INSWANCE ACT. 1998

(iv) section 433(j), the reference to a cent “avention of any provision of that
Act shall be construed as a ret’erenc a also to a contmvention of any
provision of this Act.
(4) If an application to the Court for the judicial n anagement of a long-term insurer
is made by a person other than the Registrar— 5
((/) it shall not be heard unless copies of I he notice of motion and of all
accompanying atlidavits and other docrments filed in support of the
application are lodged with the Registrar at least 15 days, or such shorter
period as the Court may allow on good cau ie shown, before the application is
set down for hearing; 10
(b) the Registrar may, if satisfied that the applit ation is contrary to the interests of
the policyholders of the long-term insurer concerned, join the application as a
party and file atidavits and other documen s in opposition to the application.
(5) As from the date on which a provisional or f,ntd judicial management order is
granted in respect of a long-term insurer— 15
([~) any reference in this Act to a long-tern insurer shall, unless clearly
inappropriate, be construed as a reference [o the provisional or final judicial
manager, as the case may be;
(/~) the provisional or Jiwrl judicial manager of a long-term insurer shall not enter
into any long-term policies unless he or she hirs been granted permission to do 20
so by the Court in the provisional or final udicial management order or in a
variation thereof.

Winding-up by Court

42. ( 1 ) Notwithstanding the provisions of the Companies Act or any other law under
which a hmg-term insurer is incorporated, Chapter XIV of the Companies Act shall, 25
subject to this section and with the necessary changes, apply in relation to the
winding-up of a long-term insurer. and in such applic:, tion the Registrar shall be deemed
to be a person authorised by section 346 of the Com)>anies Act to make an application
to the Corrrt for the winding-up thereof.
(2) The Registrar may, with the written approval ot the Minister, make an application 30
under section 346 of the Companies Act for the wind rig-up of a long-term insurer if he
or she is satistied, whether as contemplated in sect-on 12(3) or 35(2) of this Act, or
otherwise, that it is in the interests of the policyholder, of that long-term insurer to do so.
(3) In the application of Chapter XIV of the Compa lies Act as provided by subsection
(l)— 35
{a) a reference which relates to the inability of:1 long-term insurer to pay its debts
shall be construed as relating also to i s inability to comply with the
requirements prescribed by section 29( 1 ) of this Act;
(b) in addition to any question whether it is ylst and equitable that a long-term
insurer should be wound up, there shall be considered also the question 40
whether it is in the interest of the policyhol .lers of that long-term insurer that
it should be wound up;
(c) notwithstanding any other provision of that Chapter, there shall be considered
whether a person is acting in contmventior of section 7(1 )(a) of this Act;
(d) in the following sections of the Companies Act, namely— 45
(i) sections 392, 394(5) and 400, the reference to the Master shall be
construed as a reference also to the Registrar;
(ii) sections 375(5)(a) and 419( I), the reference to the Registmr of
Companies shall be construed as a rettrence also to the Registrar; and
(iii ) section 400, the reference to a contrm mtion of any provision of that Act 50
shall be construed as a reference also t ) a contravention of any provision
of this Act; and
(e) section 346(3) of the Companies Act sha !I not apply where the Registrar
makes the application to Court.
(4) It’ an application to the Court for or in respect of the winding-up of a long-term 55
insurrr is made by any person other than the Registr lr—
54 No. 19276 GOVEF NMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 199tt LONG-TERM INSU:{ANCE ACT, 1998

(a) it shall not be heard unless copies of t’~e notice of motion and of all
accompanying affidavits and other documents filed in support of the
application are lodged with the Registrar at least 15 days, or such shorter
period as the Court may allow on good caus e shown, before the application is
set down for hearing; and 5
(b) the Registrar may, if satisfied that the applic ation is contrary to the interests of
the policyholders of the long-term insurer cmcemed, join the application as a
party and file affidavits and other documenrs in opposition to the application.

Voluntary winding-up

43. No special resolution relating to the windi] Ig-up of a long-term insurer as 10

contemplated in section 349 of the Companies Act sh: 11 be registered in terms of section
200 of that Act, and no special resolution to that efie{ ‘t in terms of the constitution of a
long-term insurer which is not a company shall have legal force—
(uJ unless a copy thereof has been lodged with he Registrar and he or she has, by
notice to the long-term insurer, declared thi t arrangements satisfactory to the 15
Registrar have been made to meet all liabili ies of the long-term insurer under
long-term policies entered into by it prior t ) the winding-up; or
(b) if the Registrar, by notice to the long-term i!lsurer, declares that the resolution
is contrary to this Act.

Part VII I 20

Business practice, policies and polic:, holder protection

Business practice

Free choice in certain circumstances

44. ( 1 ) If a party to a contract in terms of which mc ney is loaned, goods are leased or
credit is granted, requires, whether as a condition thel eof or otherwise, that a long-term 25
policy or its policy benefits be made available and use J for the purpose of protecting the
interests of a creditor, the person who is so required to make that policy or those policy
benefits available shall be entitled, and shall be give]) prior written notification of that
entitlement, to a free choice—
(a) as to whether he or she wishes to enter into i new policy and make it available 30
for that purpose, or wishes to make available an existing policy of the
appropriate value for that purpose, or wishe $ to utilise a combination of those
options; and
(b) if a new policy is to be entered into--
(i) as to the long-term insurer with which he policy is entered into and as to 35
the intermediary (if any) who is to render services contemplated in
section 49 in connection with the tran: action;
(ii) as to whether or not the policy benefit$ concerned are to be provided in
an event other than the death or disabi Iity of the life insured; and
(iii) as to whether or not the value of the policy benefits to be provided 40
thereunder, when taken in the aggregate with the value of the policy
benefits provided under any other p]licy which is also to be made
available and used for that purpose, sh;Jl exceed the value of that debt or
other obligation; and
(c) if an existing policy is to be made availablt- 45
(i) as to the intermediary (if any) who is t) render services contemplated in
section 49 in connection with the tram action; and
(ii) as to whether or not a variation of the policy required for that purpose
shall be such as to cause—
56 No 19276 GOVERNMENT GAZE7TE, 23 SEPTEMBER 1998

Act No. 52.1998 LONG-TERM INSURANCE ACT, 1998

(UU) policy benefits to be provided in an event other than the death

or disability of the life insured; or
(bb) the value of the policy benefits to be provided thereunder,
when taken in the aggregate with the value of the policy
benefits provided under any other policy which is also to be 5
made available and used for that purpose, to exceed the value
of that debt or other obligation.
(2) The provisions of subsection(1) shall be deemed not to have been complied with
unless the policyholder whose policy is to be made available has confirmed in writing,
before the policy is used for the purpose of securing the debt concerned or other 10
obligation, that he or she—
(a) was given prior written notification of his or her entitlement to the freedom of
choice referred to in that subsection;
(b,) exercised that freedom of choice; and
(c) was not subject to any coercion or inducement as to the manner in which he or 15
she exercised that freedom of choice.
(3) If the provisions of subsection (1) are not complied with, the security provided by
the policy made available and used for the purpose shall be void and the policy benefits
shall be provided to the person who made it available.

Prohibition on inducements 20

45. No person shall provide, or offer to provide, directly or indirectly, any valuable
consideration as an inducement to a person to enter into, continue, vary or cancel a
long-term policy, other than a reinsurance policy.

Policy to be actuarially sound

46. A long-term insurer shall not— 25

(u) enter into any particular kind of long-term policy unless the statutory actuary
is satisfied that the premiums, benefits and other values thereof are actuarially
sound;
(b) make a distinction between the premiums, benefits or other values of different
long-term policies unless the statutory actuary is satisfied that the distinction 30
is actuarially justified; or
(c) award a bonus or similar benefit to a policyholder unless the statutory actuary
is satisfied that it is actuarially sound and that a surplus is available for that
purpose.

Receipt for premium paid in cash, and validity of policy 35

47. ( I ) When a premium is paid in bank notes or coins, the recipient thereof shall give
to the payer a written receipt for it.
(2) The receipt shall state the name, address and telephone number of the recipient,
the policy number and the name of the long-term insurer on whose behalf the premium
is received. 40
(3) For the purposes of the validity of a long-term policy the payment of a premium
under the long-term policy to a person on behalf of the long-term insurer shall be
deemed to be payment to the long-term insurer under that long-term policy.

Summary, inspection and copy of policy

48. ( 1 ) A person who enters into or varies a long-term policy, other than a fund policy 45
and a reinsurance policy, shall be provided in writing or in another form prescribed by
the Registrar, by the long-term insurer concerned, with information, in the form of a
summary, relating to at least the following matters, namely—
58 No. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

(u) those of the representations made by or on behalf of that person to the insurer
which were regarded by that insurer as material to its assessment of the risks
under the policy;
(b) the premiums payable and the policy benefits to be provided under the policy;
and 5
(c) the events in respect of which the policy benefits are to be provided and the
circumstances (if any) in which those benefits are not to be provided,
and shall be provided with that information as soon as possible, but not later than 60
days after the parties enter into or agree to vary the policy.
(2) The summary referred to in subsection (1) shall be prima facie proof of the 10
agreement, but shall—
(a) not be deemed to be part of the policy;
(b) in the absence of evidence to the contrary, be deemed to be exhaustive of the
matters which are material to the assessment of the risks under the policy.
(3) The policyholder shall be entitled to be provided, upon request, with a copy of the 15
policy.

Limitation of remuneration to intermediaries

49. No consideration shall be offered or provided by a long-term insurer or a person

on behalf of the long-term insurer or accepted by any independent intermediary for
rendering services as intermediary as referred to in the regulations, other than 20
commission contemplated in the regulations and otherwise than in accordance with the
regulations.

Undesirable business practice

50. (1) Notwithstanding anything to the contrary in any law contained, the Registrar
may, after consultation with the Advisory Committee and in concurrence with the 25
Minister, by notice in the Gazette declare a particular business practice to be undesirable
for—
(u) all or a particular category of long-term insurers; or
(b) all or a particular category of persons who render services in respect of
long-term policies. 30
(2) The Minister shall not concur with a declaration referred to in subsection (1)
unless the Registrar has, at least 30 days before that concurrence is requested, by notice
in the Gazette published his or her intention to make the declaration and invited
interested persons thereby to make written representations concerning the intended
declaration so as to reach him or her within 21 days after the date of publication of that 35
notice.
(3) If the Registrar is satisfied that a long-term insurer or a person rendering services
in respect of long-term policies is carrying on a business practice which may become the
subject of a declaration under this section, he or she may, in concurrence with the
Minister, by notice direct that long-term insurer or person to suspend that particular 40
business practice for such period, not exceeding three months, as he or she deems
necessary to enable the matter to be dealt with in accordance with subsection ( I).
(4) A long-term insurer or other person shall not, on or after the date of a notice
referred to in subsection (1), or of a directive referred to in subsection (3), carry on the
business practice concerned. 45
(5) The Registrar may, by notice, direct a long-term insurer or other person who, on
or after the date of a notice referred to in subsection (1), or a directive referred to in
subsection (3), carries on the business practice concerned, to rectify, to the satisfaction
of the Registrar, anything which was caused by or arose out of that carrying on of the
business practice concerned. 50
(6) A long-term insurer or other person who is, under subsection (5), directed to
rectify anything, shall do so within 60 days after he, she or it is so directed.
60 No. 19276 GOVERNMENT GAZE’ITE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

Policies

l%licy suspended until payment of first premium

51. The undertaking of a long-term insurer to provide policy benefits under a

long-term policy, other than a fund policy or a reinsurance policy, shall be suspended
until the long-term insurer has received, if there— 5
(u) is to be one premium, that premium; or
(b) are to be two or more premiums, the first of those premiums,
or until arrangements to its satisfaction have been made for the provision of the premium
by debit order, stop order, credit card or other instrument approved by the Registrar
generally by notice in the Gazette. 10

Failure to pay premiums

52. ( 1 ) If a premium under a long-term policy, other than a fund policy or a

reinsurance policy, has not been paid on its due date, the long-term insurer shall notify
the policyholder of the non-payment, and the policy shall, notwithstanding anything
therein to the contrary, in the case of a long-term policy under which there are to be two 15
or more premium payments at intervals of—
(u) one month or less, remain in force for a period of 15 days after that due date;

(b) &ger than one month, remain in force for a period of one month after that due
date, 20
or for such longer period as may be determined by agreement between the parties, and
if the overdue premium is not paid by the end of any such period, the policy shall be
dealt with in accordance with subsection (2).
(2) in the case of a policy contemplated in subsection (1) the remaining value of
which, after the satisfaction of any claim of the long-term insurer which is secured solely 25
by the policy benefits to be provided under the policy, is greater than half of the
aggregate amount of the premium payments due thereunder during the period of 12
months commencing on the due date of the unpaid premium, the long-term insurer
shall—
(a) inform the policyholder, in the medium prescribed by the Registrar, of the 30
amount of that remaining value and notify him or her that the policy will
remain in force, in accordance with the rules of the long-term insurer, until—
(i) the policy no longer has any such remaining value, whereupon it will
lapse;
(ii) the payment of premiums is resumed; 35
(iii) the provisions of the policy are amended, in accordance with the rules of
the long-term insurer, so that it becomes a policy which is fully paid-up;

(iv) $the policyholder so requests, the policy is surrendered, in accordance

with the rules of the long-term insurer, and so much of the remaining 40
value as then remains is, subject to section 54, paid to the policyholder;
and
(b) deal with the policy accordingly.
(3) A long-term insurer shall have rules which to the satisfaction of its statutory
actuary prescribe a sound basis on which, and the methods by which, a long-term policy 45
is to be valued and otherwise dealt with for the purposes of subsection (2).

Option for payment of policy benefits in money

53. Notwithstanding the terms of an assistance policy, either party thereto may
request that a policy benefit which is expressed otherwise than in a sum of money shall
be provided as a sum of money equal in value to the cost that would have been incurred 50
by the long-term insurer had the non-monetary benefit been provided.

Limitation on provisions of certain policies

54. A long-term insurer shall not—

(a) undertake to provide policy benefits, or provide policy benefits, under;
(b) provide consideration upon the surrender ofi or 55
62 No. [9276 GOVERNMENT GAZEITE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

(c) make a loan upon the security of,

a long-term policy contemplated in the regulations, otherwise than in accordance with
the requirements and limitations set out in the regulations.

Limitation on policy benefits in event of death of unborn or of certain minors

55. ( 1 ) A long-term insurer shall not undertake to provide, or provide, policy benefits, 5
in terms ot’ a life policy or assistance policy, in the event of the death of an unborn, or of
a minor before that minor attains the age of 14 years, the value of which, on its own or
when added to the value of policy benefits which to its knowledge are to be provided in
that event by a long-term insurer or a short-term insurer or a friendly society in terms of
any policy, exceeds, in the event of the death— 10
(u) of that unborn, or of that minor before he or she attains the age of six years,
R 10 000; or
(b) of that minor after he or she attains the age of six years but before he or she
attains the age of 14 years, R30 000,
or such other amount prescribed by the Minister: Provided that this section shall not 15
apply to or prohibit the allocation of profit in respect of such policies on the lives of
minors, which allocation does not exceed the profits allocated to other such policies on
the lives of persons who are not minors.
(2) Subsection (1) shall not apply in relation to a policy in terms of which, in the event
of the death of the unborn, or of the minor before he or she attains the age of 14 years, 20
the value of the policy benefits does not exceed an amount equal to the aggregate of all
the premiums paid in terms of that policy, plus interest on each premium at a rate
prescribed by the Minister, compounded annually.

Voidness of certain provisions of agreements relating to long-term policies

56. A provision of an agreement, the purport of which is that— 25

(a) a long-term insurer is exempted from liability for the actions, omissions or
representations of a person acting on its behalf in relation to a long-term
policy;
(b) the person who has entered into the long-term policy declares or admits that a
person who acted on behalf of the long-term insurer in connection with an 30
offer of that person to do so, or with the negotiations preceding the entering
into it, was in fact appointed to act on behalf of the first-mentioned person:
(c) the obligation of a long-term insurer under a long-term policy is dependent
upon the discharging of an obligation of another person under a reinsurance
policy; or 35
(d) a person who has entered into a long-term policy, or the life insured under a
long-term policy, waives a right to which he or she, by or under this Act, is
entitled,
shall be void.

Life policy in relation to person rendering or liable to render military service 40

57. (1) A long-term insurer shall not refuse to enter into a life policy on the grounds
that the life insured is a person rendering or liable to render military service in
accordance with the Defence Act, 1957 (Act No. 4+ of 1957).
(2) Notwithstanding anything to the contrary in a life policy contained, the policy
benefits to be provided thereunder in the event of the death of the life insured in the 45
course of or as a result of the rendering of military service in accordance with the
Defence Act, 1957, shall not be less than an amount equal to the value for which the
policy could be surrendered on the day of the death of the life insured, had the
regulations not been made.
64 N{). 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Ad No. 52, 1998 LONG-TERM INSURANCE ACT. 1998

[Link]-term policies entered into by certain minors

58. A minor who htis tittained the age of 18 years may, without the consent of his or
her gumlian as if he or she has attained majority, enter into or vury, or deal with a
long-term policy under which he or she is the life insured and pay the premium due
under the policy with money which he or she has earned or which is at his or her 5
disposal, and a policy benetit under the policy shall be provided m the minor who may
deal with it as he or she thinks fit witbout the consent of his or her guardian, as if he or
she has attained majority.

Misrepresentation

59. ( 1 ) Notwithstanding anything to the contrary in a long-term policy contained, 10

whether entered into before or after the commencement of this Act, but subject to
subsection (2)—
(u) the policy shall not be invalidated;
(b) the obligation of the long-term insurer thereunder shall not be excluded or
limited; and 15
(c) the obligations of the policyholder shall not be increased,
on account of any representation made to the insurer which is not true, whether or not the
representation has been warranted to be true, unless that representation is such as to be
likely to have materially atTected the assessment of the risk under the policy concerned
at the time of its issue or at the time of any variation thereof. 20
(2) If the age of a life insured under a long-term policy has been incorrectly stated to
the long-term insurer, the policy benefits shall, notwithstanding subsection (1), be those
which would have been provided under that policy in return for the premium payable
had the age been correctly stated: Provided that if the nature of that long-term policy, or
kind of long-term policy, is such as to render such arrangement inequitable, the Registrar 25
may direct the long-term insurer to apply such different method of adjustment to the
policy benefits of that long-term policy, or type of long-term policy, as the Registrar
considers equitable in relation to the misstatement of age.

Validity of contracts

60. (1) A long-term policy, whether entered into before or after the commencement of 30
this Act, shall not be void merely because a provision of a law, including a provision of
this Act, has been contravened or not complied with in connection with it.
(2) If a person has entered into a long-term policy with a long-term insurer who was,
in terms of this Act, prohibited from entering or not authorised to enter into the
long-term policy, or with another person who is not a long-term insurer but who has in 35
terms of a long-term policy undertaken an obligation as insurer, thut person, by notice in
writing to such long-term insurer or other person, or the Registrar by notice to such
long-term insurer or other person and in the Gazette, may cancel the long-term policy,
whereupon that person shall be deemed to be in the same legal position in respect of such
long-term insurer or other person as if the policy had been cancelled by that person on 40
account of a breach of contract by such long-term insurer or other person.
(3) Any contract entered into before the commencement of this Act the entering into
of which is contrary to this Act or which contains terms prohibited by this Act, shall not
be void nor shall the performance of its terms be unlawful merely because of any such
fact. 45

Prescription of certain debt

61. Debt consisting of interest on an unpaid premium, or on a loan grunted by a

long-term insurer on sole security of a long-term policy, or on an advance granted by a
long-term insurer in respect of an amount which is to be payable under a long-term
policy, shall, in the case of a long-term policy entered into after31 December 1973, not 50
prescribe before the liability of the long-term insurer under the long-term policy
prescribes.
66 No. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Ad No. 52, 1 W LONG-TERM INSURANCE ACT. 1998

Policyholder protectirm

Protection of policyholders

62. ( 1 ) The Advisory Committee, or the Registrdr after consultation with the Advisory
Committee, may—
(u) propose rules aiming to ensure that policies are entered into, executed and 5
enforced in accordance with sound insurance principles and practice in the
interests of the parties and in the public interest generally;
(b) propose the vtiriation or rescission of any such rule; and
(CJ propose the period which must elapse before a rule, variation or rescission
takes effect after it has been published in the Gazette in terms of subsection 10
(5).
(2) Without derogating from the generality of subsection (1)(a), a rule may provide
that—
(a) provisions with a particular import may not appear in a policy and that they
shall be void if they do so appear; 15
(b) particular information in relation to a policy shall be made known in a
particular manner to a prospective policyholder or policyholder, and what the
legal consequences shall be if that is not done;
(c) a policyholder may cancel a policy under particular circumstances and within
a deter~ined period, and what the legal consequences shall be it’ he or she ~o
does that;
(d) diiferent arrangements shall apply in relation to different kinds of long-term
policies; and
(e) in respect of a contravention of, or a failure to comply with, a rule, a penalty
or fine referred to in section 66( I )(c) or 67(1 )(c) shall apply. 25
(3) The Registrdr shall publish in the Gazette a rule, variation or rescission proposed
under subsection (1), together with—
(a) a notice of intention to promulgate the rule, variation or rescission; and
(b) an invitation to all interested persons to make written representations in
relation to the matter so as to reach the Registrar within 21 days, or a longer 30
period specified in the notice, after the date of publication of the notice.
(4) The Registrar shall submit to the Minister the proposed rule, variation or
rescission and all written representations received accompanied by the Registrar’s
comments and those of the Advisory Committee thereon and, after consideration
thereof, the Minister may reject, or approve as proposed, or approve in a modified form 35
which the Minister deems fit, the proposed rule, variation or rescission.
(5) If the Minister approves, whether as proposed or in a modified form, a proposed
rule, variation or rescission, the Minister shall promulgate it by notice in the Gazette,
and thereupon it shall be binding on all parties concerned with effect from a date
determined by the Minister and specified in the notice. 40

Protection of policy benefits under certain long-term policies

63. (I) Subject to subsections (2) and (3), the policy benefits provided or to be
provided to a person under one or more assistance, life, disability or health policies in
which that person or the spouse of that person is the life insured and which has or have
been in force for at least three years (or the assets acquired exclusively with those policy 45
benefits) shall, other than for a debt secured by the policy—
(u) during his or her lifetime, not be liable to be attached or subjected to execution
under a judgment of a court or form part of his or her insolvent estate; or
(b) upon his or her death, if he or she is survived by a spouse, child, stepchild or
parent, not be available for the purpose of the payment of his or her debts. 50
(2) The protection contemplated in subsection ( 1 ) shall apply to—
(a) assets acquired solely with the policy benefits, for a period of five years from
the date on which the policy benefits were provided; and
(ii N<P. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

lid No, 52, 1998 LONG-TERM INSURANCE ACT, 1998

(b) policy benefits and assets so acquired (if any) to an aggregate amount of
R50 000 or another amount prescribed by the Minister.
(3) Policy benefits fire only protected as provided in—
((i) subsection ( I )(b), if they devofve upon the spouse, child, stepchild or parent of’
the person referred to in subsection ( 1 ) in the event of that person’s death; and 5
(b) subsection ( 1 )(a) and (b), if’ the person claiming such protection is able to
prove on a balance of probabilities that the protection is afforded to him or her
under this section.

%lection for realisation of protected policies

64. If— 10
(a) two or more long-term policies referred to in section 63, held by the same
policyholder, are atlached in execution of a judgment or order of any court at
the instance of a creditor; or
(b) the policyholder of two or more long-term policies referred to in section 63 is
found to be or otherwise declared insolvent by a Court, 15
and only a part of the aggregate realizable value of the policies is protected as
contemplated in that section, the judgment creditor or the trustee of the insolvent estate,
as the case may be, shall determine which policy or policies shall be realised, wholly or
partially, in order to make available to him or her so much of the aggregate realizable
value as is not so protected and to which he or she is entitled. ~(f

Partial realisation of protected policies

65. ( I ) A judgment creditor or the trustee of the insolvent estate of a policyholder, who
is entitled to a part of the realizable value of a long-term policy may, if he or she is in
possession of the policy, deliver it to the insurer who is liable under the policy for the
purpose of the payment to that creditor or trustee of the sum to which he or she is 25
entitled.
(2) If a judgment creditor or trustee referred to in subsection ( 1 ) is not in possession
of the policy concerned, the person in possession thereof shall, at the request of the
judgment creditor or trustee, deliver it to the insurer which is liable under the policy for
the purpose of the payment to that creditor or trustee of the sum to which he or she is 30
entitled.
(3) On receipt of a long-term policy delivered to it in terms of subsection (I) or (2),
the long-term insurer shall—
(a) at the request of the judgment creditor or trustee concerned, pay to him or her
a sum equal to that part of the realizable value of the policy to which he or she 35
is entitled; and
(b) deal with the remaining part of the realizable value of the policy in accordance
with section 52(2).

Part VII1
Offences and penalties 40
Offences by persons other than long-term insurers
66. ( [ ) A person, other than a long-term insurer, who-
(a) contravenes or fails to comply with a provision of a notice, directive or request
referred to in section 4(3), (4) or (5)(a)(i), 22(2) or 27(2);
(b) contmvenes or flails to comply with a provision of section 8( 1 )(a) or (b), 16(2), 45
23( l), 28( l), 44( l), 45, 47 or 49;
(,) where a rule contemplated in section 62(2)(e) so provides, contravenes or fails
to comply with u provision of any rule promulgated under section 62(5), to the
extent so provided; or
(d) furnishes false information in relation to an application referred to in section 50
9(l) or an application for the approval of the Minister under a provision of this
Act,
shall be guilty of tin offence and liable on conviction to a fine not exceeding R 100000
or to imprisonment for ti period not exceeding one year or to both such fine and such
imprisonment. 55
70 No, 19276 GOVERNMENT GAZE’ITE, 23 SEPTEMBER 1998

Act No, 52, 1998 [Link]-TERM INSURANCE ACT, 1998

(2) A person, other than a long-term insurer, who contravenes or Pdils to comply with
u provision of section 7( 1 )(a), 8(3), 26(1) or (2) or 50(4) or (6), shall be guilty of an
otience and liable on conviction to a fine not exceeding R 1 000000 or to imprisonment
for a period not exceeding 10 years or to both such tine and such imprisonment.

of fences by long-term insurers 5

67. ( 1 ) A long-term insurer which—

(a) contravenes or fails to comply with a provision of a notice, directive or
requirement referred to in section 4(2), (3) or (4), 22(1) or (2), 27(l), 3 1(2),
35(1) or (2)(a) or 36(2);
(b) contravenes or f~ils to comply with a provision of section 7( l)(b), 8(2), 16( 1 ), 10
17, 18, 23(1) or (2), 25(l), 29(3), 36(1), 44(l), 45, 48(l), 49, 54 or 55(l); or
(c) where a rule contemplated in section 62(2)(e) so provides, contravenes or fails
to comply with a provision of any rule promulgated under section 62(5), to the
extent so provided,
shall be guilty of an offence and liable on conviction to a fine not exceeding R 100000. 15
(2) A long-term insurer who contravenes or fails to comply with a condition
contemplated in section 9(2)(u) or a provision of a notice under section 12(2)(c’J or
13(2), or of section 7(I)(u), 15(1) or (2), 19(1) or (3), 20(1), (3) or (4), 24, 26(1) or (2),
29( I), 30, 31( 1), 34, 46 or 50(4) or (6), shall be guilty of an offence and liable on
conviction to a fine not exceeding R 1000000. Z()

Penalty for failure to furnish Registrar with returns etc

68. ( 1 ) A person who fails to furnish the Registrar with a return, information or
document, as provided by this Act, within the prescribed or specified period or any
extension thereof, shall, irrespective of any criminal proceedings instituted against the
person under this Act, be liable to a penalty not exceeding R 1000 for every day during 25
which the failure continues, unless the Registrar, on good cause shown, waives the
penalty or any part thereof.
(2) A penalty contemplated in subsection (1) shall be imposed by notice by the
Registrar on the person concerned, and such imposition shall be preceded by the
procedures prescribed by the Minister to afford such person a reasonable opportunity to 30
be heard, and shall take effect on a date specified in such notice of the Registrar which
may be a date prior to the date of the notice.
(3) A penalty so imposed shall constitute a debt due to the Board and shall be
recoverable by action by the Board in any court having jurisdiction.

Part IX 35

Transitional and general provisions

Transitional prot’isiotts

Continued registration of existing insurers

69. (1) A person who immediately prior to the commencement of this Act was
registered in terms of the repealed Act, and was, by virtue of that registration, authorised 40
to carry on long-term insurance business as defined in that Act, shall be deemed to be
registered as a long-term insurer in terms of this Act and shall, subject to this Act, be
authorised, in the case of a person who was so authorised to carry on the long-term
insurance business of providing or undertaking to provide policy benefits in terms of—
(cl) assistance policies; 45
(b) disability policies;
(c) fund policies;
72 N{). 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 1. ONG-TERM INSURANCE ACT, 1998

(d) health policies;

(e) life policies; or
(f) sinking fund policies,
to carry on that business subject, as if they were conditions contemplated in section
9(z)([j) of [his Act, to the conditions which had been determined in respect of such 5
person in relation to such person’s registration to carry on that business in terms of the
repealed Act.
(2) A person referred to in subsection ( 1 ) shall, within a period of six months after the
commencement of this Act, make application to the Registrar in accordance with section
3(2) for the issuing to such person, as contemplated in section 9(2)(b), of a new 10
certificate of registration in exchange for the certificate of registration issued to such
person under the repealed Act.
(3) Upon receipt of an application in terms of subsection (2), the Registrar shall issue
the new certificate of registration specifying the conditions referred to in subsection ( 1 )
as if they had been determined by him or her with the necessary changes in terms of 15
section 9, and shall not thereupon vary any of those conditions, or determine a new
condition, otherwise than in terms of section 11.

Certain existing insurers to cease short-term insurance business or to separate it

from long-term insurance business

70. A person referred to in section 69(1), who was, by virtue of such person’s 20
registration under the repealed Act, authorised to carry on both long-term insurance
business and short-term insurmce business, other than reinsurance business only, as
detined in that Act, shall, within a period of six months after the commencement of this
Act, make arrangements satisfactory to the Registmr and in accordance with the
appropriate provisions of the Short-term Insurance Act, 1998, as the case may be, which 25
have the result—
(u) that the long-term insurer ceases to carry on that short-term insurance
business; and
(b) that the long-term insurance business concerned is carried on by a long-term
insurer and the short-term insurance business concerned is carried on by a 30
short-term insurer.

General provisions

Special provisions concerning long-term insurers that are not public companies

71. (1) Notwithstanding anything to the contrary in any law contained, a long-term
insurer which is not a public company shall be subject to section 36 of the Companies 35
Act with the necessary changes as if it were a public company having a share capital.
(2) The provisions of this Act shall prevail over any provision of a law under which
a long-term insurer contemplated in section 9(3)(a)(ii) is incorporated if that provision
is inconsistent with this Act.
(3) The financial statements of a long-term insurer, other than the financial statements 40
drawn up by the statutory actuary, shall be drdwn up and presented in accordance with
Generally Accepted Accounting Practice.

Regulations

72. ( I ) The Minister may make regulations not inconsistent with this Act—
(a) prescribing all matters which are required or permitted by this Act to be 45
prescribed by regulation;
{h) limiting the amount which and the extent to which a long-term insurer may
invest in particular kinds and categories of assets, prescribing the basis on
which the limit shall be determined and defining the kinds or categories of
assets to which the limit applies; 50
(c) authorizing the Registrar to g~dnt unconditional or conditional exemption,
whether unlimited or limited in duration, from provisions of the regulations
contemplated in paragraph (b);
74 No. 19276 GOVERNMENT GAZETTE, 23 SEITEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

(d) prohibiting any consideration from being offered or provided, or limiting the
consideration which may be offered or provided, from, by or on behalf of a
long-term insurer to any person for rendering services as intermediary, or to
any other person associated in business with or related within the second
degree of consanguinity or affinity to any person who has rendered or is to 5
render such services;
(e) prohibiting any consideration from being offered or provided, or prescribing
the manner in and conditions on which consideration may be otfered or
provided, from, by or on behalf of any person other than a long-term insurer
to any person for rendering services as intermediary, or to any other person 10
associated in business with or related within the second degree of consanguin-
ity or affinity to any person who has rendered or is to render such services;
(~) prescribing different classes of persons to whom consideration contemplated
in paragraphs (d) and (e) may be offered or provided, for such services
rendered or to be rendered; 15
(g) prescribing periods within which policies and amended policies are to be
issued;
(h) prescribing that every long-term insurer shall within a specified period as from
the close of each financial year of its long-term insurance business furnish the
Registrar with a statement of all changes which occurred during the said year 20
in specified matters in relation to the insurer concerned.
(2) Regulations made under this section may prescribe a fine or a period of
imprisonment not exceeding one year for a contravention of or a Fdilure to comply with
a provision of the regulations.
(3) The Minister shall publish any regulations made under this section in the Gazerre. 25

Repeal and amendment of laws

73. Subject to section 74, the laws specified in Schedule 4 are hereby repealed or
amended to the extent set out in the third column of that Schedule.

Savings

74. (1) Notwithstanding the partial repeal of the repealed Act by section 73, the 30
provisions of—
(a) section 25, read with section 19A of that Act, shall continue to apply in
relation to a long-term insurer that has before the commencement of this Act
notified the Registrar, as defined in the repealed Act, that it intends to apply to
the Court for the confirmation of a conversion contemplated in the said section 35
25, and if such application is made to the Court before31 December 1999, that
application may, if the long-term insurer so elects, be made, continued with
and dealt with in accordance with the said provisions as if they had not been
repealed by section 73;
(b) section 38, read with sections 38B, 52,58 and 59 of that Act, shall continue to 40
apply in relation to a policy contemplated in those sections and entered into
during the period 1 April 1944 to 20 June 1978;
(c) section 38A, read with sections 38B, 52, 58, 59 and 59A of that Act, shall
continue to apply in relation to any policy contemplated in those sections and
entered into during the period 21 June 1978 to the date immediately before the 45
commencement of this Act;
(d) section 62 of that Act shall continue to apply in relation to any industrial and
funeral policy contemplated in that section;
(e) the Second Schedule to that Act shall continue to apply to industrial and
funerdl policies. 50
(2) Anything done before the commencement of this Act under, in terms of or by
virtue of a provision of the repealed Act by or in relation to persons registered in terms
of that Act to carry on long-term insurance business as defined in that Act shall, in so far
76 No, 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act N(). 52, 1998 LONG-TERM INSURANCE ACT, 1998

as it was done lawfully and unless it is clearly inappropriate, be deemed to have been
done under, in terms of or by virtue of the corresponding provision of this Act.

Interpretation of certain references in existing laws

75. Unless it would in a particular case be clearly inappropriate, a reference in a law

in force immediately before the commencement of this Act— 5
((1) to a domestic insurer or a registered insurer, shall be construed as a reference
to a long-term insurer or a short-term insurer, as the case may be;
(h) to a home service policy, a funeral policy or an industrial policy, shall be
construed as a reference to an assistance policy;
((”) to home service business, funeral business or industrial business, shall be iO
construed as a reference to the business of providing policy benefits under
assistance policies;
(d) to insurance business as deftned in the repealed Act, shall, in relation to a
long-term insurer, be construed as a reference to long-term insurance
business; 15
(e) to a life policy, shall be construed as a reference to a life policy, a disability
policy, a fund policy or a health policy, as the case may be;
(j) to life business, shall be construed as a reference to the business of providing
policy benefits under long-term policies other than assistance policies or
sinking fund policies; 20
(g) to a personal accident policy, shall, in relation to a long-term insurer, be
construed as a reference to a disability or health policy;
(h) to personal accident business, shall, in relation to a long-term insurer, be
construed as a reference to the business of providing policy benefits under
disability or health policies; 25
(i) to a valuator, as defined in the repealed Act, shall be construed as a reference
to a statutory actuary.

Short title and commencement

76. This Act shall be called the Long-term Insurance Act, 1998, and shall come into
operation on a date fixed by the President by proclamation in the Gazerre. 30
7X N{,. J927fI GOVERNMENT GAZE’ITE, 23 SEPTEMBER 1998

Act N(I. 52, 1998 LONG-TERM INSURANCE ACT, [998

Schedule 1

(Section 31)

Kinds of assets

Requirement for claim to be asset, and definitions

1. For the purposes of this Schedule turd section31 a claim qualifies as an asset in the
Republic only if it is enforceable in accordance with the law of the Republic and is
realizable in the Republic, and—
“contract for differences” means a contract the purpose of which is to secure a profit or
avoid a loss by reference to fluctuations in the value or price of—
(a) an asset;
(b) income from such asset;
(c) an index of such assets or the income therefrom;
“derivatives” means—
(u) an option contract as contemplated in the definition of “securities” in section
1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985);
(b) a futures contract and an option contract as defined in section 1 of the
Financial Markets Control Act, 1989 (Act No. 55 of 1989); and
(c) a contract for differences;
“listed”, in relation to an asset referred to in item 16(5) of the Table to this Schedule,
means that—
((1) there has been granted and not withdrawn, a listing in respect of that asset on
a stock exchange outside the Republic, and that transactions in the asset are
effected regularly on that stock exchange; or
(b) transactions in that asset are effected regularly on a regulated market;
“margin”, in relation to a stock exchange referred to in item 16(5)(a)(aa) of the ~~ble
to this Schedule, means the margin as defined in regulations issued or approved by the
appropriate authority of the state in which the stock exchange is situated or which is
required by that stock exchange;
“margin deposit” means a margin with SAFEX and a stock exchange referred to in item
16(5)(a)(aa) of the Table to this Schedule;
“margin with SAFEX” means the margin as defined in the rules of the South African
Futures Exchange, referred to in section 17 of the Financial Markets Control Act, 1989;
“n.e.s.” means not elsewhere specified in this Schedule;
“regulated market” means a market situated outside the Republic which is characterised
by—
(a) regular operation; and
(b) the fact that regulations are issued or approved by the appropriate authority of
the state where the market is situated to determine conditions—
(i) for the operation of and access to the market; and
(ii) to be satisfied by a financial instrument in order for it to be effectively
traded in the market;
“securities” includes bills, bonds, debentures and debenture stock, loan stock,
promissory notes, annuities, negotiable certificates of deposit and other financial
instruments of whatever nature;
“shares” includes share stock.

Derivatives

2. An instrument shall be deemed not to be a derivative for the pu~oses of this

Schedule unless—
(~~) it is based on an underlying asset of the kind set out in the lkble to this
Schedule or has the equivalent etfect to such an instrument; and
80 No. 19276 GOVERNMENT GAZEITE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

(6) in the case of—

(i) an over-the-counter instrument, it is capable of being readily closed out
and is entered into with a counterpart approved by the Registrar subject
to such conditions as he or she may determine;
(ii) an instrument referred to in item 16(5)(d) of that Table, it is listed; or
(iii) any other instrument, it is regularly traded on a licensed stock exchange
in the Republic, or on any other financial market in the Republic
approved by the Registrar subject to such conditions as he or she may
determine.

Kinds of assets

3. The kinds of assets contemplated in section 31(1)(b), are those set out in the
following Table:

Table

Item Description of assets

no.

1. Bank notes ‘&d coins, including Krugerrand coins of all denominations, issued or
caused to be issued in terms of the South African Reserve Bank Act, 1989 (Act No.
90 of 1989).
2. A credk balance in an account with, or a deposit, including a negotiable depositor
a bill, accepted by, an institution finally registered under the Banks Act, 1990 (Act
No. 94 of 1990), or the Mutual Banks Act, 1993 (Act No. 124 of 1993).
3. Public deposits with the Corporation for Public Deposits established by section 2 of
the Corporation for Public Deposits Act, 1984 (Act No. 46 of 1984).
4. Securities issued by, and loans made to, the Government of the Republic in terms
of section 19 of the Exchequer Act, 1975 (Act No. 66 of 1975).
5. Securities and Iodns guaranteed by a Minister of the Republic under section 35 of
the Exchequer Act, 1975.
6. Securities issued or guaranteed by, and loans made to or guaranteed by, a body,
council or institution under the repealed Provincial Government Act, 1961 (Act No.
32 of 1961).
7. Securities issued by, and loans made to, the Local Authorities Loans Fund Board
under the Local Authorities Loans Fund Act, 1984 (Act No. 67 of 1984).
8. Securities issued or guaranteed by, and loans made to or guaranteed by, the Rand
Water Board under the Rand Water Board Statutes (Private) Act, 1950 (Act No. 17
of 1950).
9. Securities issued or guaranteed by, and loans made to or guaranteed by, Eskom
under the Eskom Act, 1987 (Act No. 40 of 1987).
10. Securities issued or guaranteed by, loans made to or guaranteed by, and deposits
with, the Land and Agricultural Bank of South Africa under the Land Bank Act,
1944 (Act No. 13 of 1944).
11. Securities issued or guaranteed, and loans raised or guaranteed, under the Legal
Succession to the South African Transport Services Act, 1989 (Act No. 9 of 1989).
12. Securities and loans, n.e.s., which are—
(a) issued by or made to a body corporate established by a law of the Republic;
and
(b) approved by the Registrar for the purposes of this Schedule generaIly by
notice in the Gazette subject to the conditions determined by the Registrar and
specified in the notice.
13. Securities issued by—
(a) the government ofi
(b) a local authority in; or
(c) a body corporate established by a law of,
a territory forming part of the Republic but which territory at any time before
82 N(I. 19276 GOVERNMENT GAZETTE, 23 SEETEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

27 April 1994 did not form part of the Republic, which securities have been
approved by the Registrar for the purposes of this Schedule generally by notice in
the Gazet[e and subject to the conditions determined by the Registrar and specified
in the notice.
14. Immovable property in the Republic.
15. Motor vehicles, furniture and office equipment, including computer equipment,
used by the long-term insurer concerned in the course of its business in the
Republic.
16. (1) Shares and debentures issued by a company incorporated in the Republic.
(2) Shares, debentures and depository receipts which are—
(a) issued by an institution incorporated outside the Republic; and
(b) listed on a licensed stock exchange in the Republic.
(3) Linked units—
(a) in respect of institutions one or more of which is or are incorporated
outside the Republic; and
(b) which are listed on a licensed stock exchange in the Republic.
(4) Loan stock listed on a licensed stock exchange in the Republic issued by a
company incorporated in the Republic.
( 5 ) (a) Listed—
(i) securities issued by a government of a country other than the
Republic; or
(ii) securities and shares issued by an institution incorporated outside
the Republic,
in respect of which the Registrar has recognised the—
(aa) stock exchange outside the Republic; or
(bb) country, other than the Republic, in which the regulated market
concerned is situated,
subject to the conditions determined by the Registrar.
(b) A credit balance in an account with, or a deposit, including a negotiable
certificate of deposit or a bill, accepted by, an institution incorporated
outside the Republic, in a country approved by the Registrar, which
would have been a bank in terms of the Banks Act, 1990, if it were
incorporated in the Republic. -
(c) Units which are derived from or linked to one or more assets referred to
in paragraphs (a) and (b).
(d) Derivatives and margin deposits on the assets referred to in paragraphs
(a) and (b).
17. Units in a unit trust scheme registered in terms of the Unit Trusts Control Act, 1981
(Act No. 54 of 1981).
18. Derivatives and the margin deposit in the Republic.
19. Claims secured—
(a) by mortgages over immovable property in the Republic; and
(b) solely by the policy benefits which are to be provided in the Republic by the
long-term insurer in terms of a long-term policy.
20. Other claims, n.e.s., against—
(a) a long-term insurer in terms of a long-term policy;
(b) a person in the Republic; and
(c) any stock or shares in a body corporate which is not incorporated and
registered in the Republic but which, in the opinion of the Registrar, carries on
business in the Republic and which has been approved by the Registrar
generally by notice in the Gazette and subject to the conditions determined by
the Registrar and specified in the notice.
X4 N(), 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

Schedule 2

(Sections 30 and 31)

Method of calculation of value of assets and liabilities

Part I

Valuation of assets

Definitions

1. For the pu~oses of this Schedule—

“linked policy” means a long-term policy of which the amount of the policy benefits is
not guaranteed by the long-term insurer and is to be determined solely by reference to
the value of particular assets or categories of assets which are specified in the policy and
are actually held by or on behalf of the insurer specifically for the purpose of the policy;
“market-related policy” means a long-term policy, other than a linked policy, of which
the amount of the policy benefits is not guaranteed by the long-term insurer and is to be
determined in whole or in part by reference to the value of particular assets or categories
of assets;
“market value”, in relation to an asset, means—
(a) in the case of an asset which is listed on a licensed stock exchange and for
which a price was quoted on that stock exchange on the date as at which the
value is calculated, the price last so quoted;
(b) in the case of an asset which is a long-term policy, the amount which on any
day would be payable to the policyholder upon the surrender of the policy on
that day;
(c) in any other case, the price which could have been obtained upon a sale of the
asset between a willing buyer and a willing seller dealing at arm’s length, as
estimated by the long-term insurer, or by the Registrar if the Registrar is not
satisfied with that estimate.

Amounts to be disregarded

2. For the purposes of the calculation of the value of assets contemplated in sections
30 and 31—
(a) there shall be disregarded—
(i) any amount of premium which is due and payable but unpaid, including
a premium debited to an intermediary or a deferred installment of a
premium;
(ii) an amount, other than a premium, which remains unpaid after the expiry
of a period of 12 months from the date on which it became due and
payable;
(iii) an amount representing administrative, organisational or business
extension expenses incurred directly or indirectly in the carrying on of
long-term insurance business;
(iv) an amount representing goodwill or an item of a similar nature;
(v) an amount representing a long-term policy in terms of which the
long-term insurer concerned provides or undertakes to provide a policy
benefit;
(vi) an amount representing a prepaid expense or a deferred expense; and
(vii) an amount representing a reinsurance contract in terms of which the
long-term insurer concerned is the policyholder, except to the extent that
it represents a claim against a reinsurer in terms of the reinsurance
contract; and
(b) the value of the assets mentioned in paragraph 3, in which a reference to an
item by number means a reference to the item of the Table to Schedule 1, shall
be as specitied in that paragrdph.
86 No. 19276 GOVERNMENT GAZETTE, 23 SEWEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

Calculation of values

3. The value for the purposes of—

(a) section 31( 1 )(b) of—
(i) a Krugerrand coin referred to in item 1, shall be the price which the South
African Reserve Bank is prepared to pay for it on the date as at which its
value is calculated;
(ii) a credit balance, depositor margin deposit referred to in items 2,3, 10,
16(5)(b) and (d) and 18, shall be an amount not exceeding the amount
thereo~
(iii) an asset referred to in items 4,5,6,7,8,9, 10, 11, 12, 13 and lo,
shall be an amount euual to-
(au) the cost of a~quiring the asset less the amount of interest which
was due or had accrued at the date of acquisition and which
was paid to the long-term insurer concerned after that date and
the amount of commission or stamp duty which is included in
that cost paid in respect of the acquisition; or
(bb) the capital amount repayable upon the redemption of the asset,
whichever amount is the lesser or, if the Registrar so authorises, an
amount arrived at in accordance with a method of annual adjustment
approved by the Registrar;
(iv) an asset referred to in item 16(1), (3), (4), (5)(a)(ii) and (c) which is listed
on a stock exchange and for which a ciosing price was quoted on that
stock exchange on the date as at which the value is determined, shall be
the closing price, or the closing price last so quoted.
(v) an asset referred to in items 16(5)(c) and 17, shall be the price at which
the unit would have been repurchased by the unit trust management
company on the date as at which the value is calculated, and in the case
of a property unit trust, if it is listed on a stock exchange and for which
a price was quoted on that stock exchange on the date as at which the
value is determined, shall be the closing price, or the closing price last so
quoted;
(vi) a futures contract referred to in items 16(5)(d) and 18, shall be
determined by the mark-to-market as defined in the rules of the South
African Futures Exchange referred to in section 17 of the Financial
Markets Control Act, 1989 (Act No. 55 of 1989);
(vii) an option contract referred to in items 16(5)(dJ and 18 for which a price
was quoted on a stock exchange on the date on which the value is
calculated, shall be that quoted price;
(viii) an asset referred to in item 19(b), shall be an amount not exceeding the
lesser of—
(au) the amount which, had the regulations not been applicable,
would have been paid by the long-term insurer had the policy
been fully surrendered on the date on which the value is
calculated; or
(bb) the amount of the loan or advance, including any accumulated
interest, less the amount of any unpaid commission for which
the long-term insurer is or will be liable in respect of the
policy;
(ix) an asset referred to in item 14, 15, 16(1), (2), (5)(a)(ii), (b) or (c), 19(uJ
or 20, or an asset not otherwise specified in this paragraph, shall be—
(m) in the case of an asset which is interest-bearing and which is
redeemable on a specified date or dates, an amount equal to the
lesser of—
(A) the cost of acquiring the asset less the amount of
interest accrued, or stamp duty or commission paid on
its acquisition, which is included in that cost; or
(B) the capital amount repayable upon the redemption of
the asset;
(bb) in any other case, an amount not exceeding that which could
have been obtained on the sale of the asset in the country where
xx N(I 19276 GOVERNMENT GAZEITE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT. 1998

the asset is situated between a willing seller and a willing

buyer, acting tit arm’s length and in good faith, as estimated by
the insurer;
(x) an asset referred to in item 20(a), shall be the amount which would be
payable to the policyholder on the full surrender of the policy on the day
on which the value is calculated;
(xi) a derivative nut mentioned in subsubpamgmph (vi) or (viii) shall be
calculated as determined by the Registrar from time to time; and
(b) section 30( 1)(([) and (’b) of—
(i) assets of the kinds mentioned in the Table to Schedule 1; and
(ii) assets similar in nature to the kinds mentioned in the Table to Schedule
1, unless inappropriate,
shall be calculated on the same basis as prescribed in subparagraph (a).

Savings

4. ( 1 ) Notwithstanding paragraphs 2 and 3—

(u) assets held by or on behalf of a long-term insurer for the purposes of linked
policies and market-related policies shall be valued at market value;
(b) if the Registrdr is satisfied that the value of an asset, when calculated in
accordance with paragraph 3, does not reflect a proper value, the Registrar
may direct the insurer to appoint another person, at the cost of the insurer, to
place a proper value on that asset or the Registrar may direct the long-term
insurer to calculate the value in another manner which the Registrar
determines and which will produce a proper value for that asset.
(~) ]n the case of an asset—
(a) in respect of which no basis of valuation is prescribed in paragraph 3(t/); or
(b) referred to in paragraph 3(b)(ii) where the basis prescribed is inappropriate,
the valuation shall be in accordance with Genemlly Accepted Accounting Practice.

Part 11

Valuation of liabilities

Definitions

5. In this Part, unless the context otherwise indicates—

“approved reinsurance policy” n~eans-
(a) for the purposes of dculating the contingent liabilities of a long-term insurer
under unmatured long-term policies in terms of which the policy benefits are
to be provitled—
(i) in the Republic, any proportional reinsurance policy in terms of which
the reinsurer is litible for the liabilities under unmatured policies which
remain in force until the contingent Iitibility under unmtitured policies
has expired, entered into by the long-term insurer with—
(m) another long-term insurer registered to do long-term business of the
same class, only if that reinsurance policy is also to be discharged in
the Republic;
(bb) another insurer approved by the Registran or
([1) tiny reinsurance effected prior to I January 1952, and relating to
long-term policies issued before that date; or
(ii) outside the Republic, a reinsurance policy relating to the contingent
liabilities concerned; or
(b) for the purposes of calculating the liabilities of a long-term insurer other than
contingent liabilities under unmatured long-term policies, any reinsurance;
“capitalised value” means the value capitalised on the relevant date and ctilculated
having regard to the—
90 N(), [9276 GOVERNMENT GAZETI’E, 23 SEPTEMBER 1998

Act N(I. 52, 1998 LONG-TERM INSURANCE ACT. 1998

(u) mortality ttible specified in paragraph 7;

(b) morbidity table specified in paragraph 8; and
(() assumed rates of interest specified in paragraph 9,
applicable to the policy concerned;
“date of calculation”, in relation to a policy, means the date as at which the contingent
liability under the pc)licy is determined;
“moditied net premiums” means the net premiums which have been modified, in the
case of a long-term policy other than a fund policy or a sinking fund policy, under which
the long-term insurer undertakes to provide policy benefits upon the occurrence and
solely for the reason of—
(a) a health event, a disability event or the event of the life of the life insured
having ended, and under which the premium is payable in specified amounts
throughout the period until that event occurs, by—
(i) calculating those net premiums as if that undertaking becomes operative
a year later than it actually does; or
(ii) increasing those net premiums by an amount which, on the date that
undertaking becomes operative, equals 1,5 per cent of the value of those
policy benefits commuted over the whole of that period,
whichever modification produces the higher contingent Iiabi lity under the
policy; or
(b) a health event, a disability event or the event of the life of the life insured
having ended or having continued for a period, where the premium is payable
in specified amounts throughout a particular period, by—
(i) calculating those net premiums as if that undertaking becomes opemtive
a year later than it actually does and as if that particular period were
reduced by one year; or
(ii) increasing those net premiums by an amount which, on the date that
undertaking becomes operative, equals 1,5 per cent of the value of those
policy benefits commuted over the whole of that particular period,
whichever modification produces the higher contingent liability under the
policy;
“net premiums” means premiums each of such an amount that, if all premiums payable
under the life policy concerned had been net premiuhs, their value, capitalised on the
dtite on which the liability of the long-term insurer under such life policy commenced,
would have equalled the capitalised value of the policy benelits, excluding any bonus,
on the said date according to the contingencies upon which such policy benelits are
payable, calculated as prescribed in this Schedule.

General requirements

6. ( 1 ) For the purposes of this Part a calculation of the liabilities of a long-term insurer
shall be deemed to be a calculation on the minimum basis if the applicable requirements
of this Schedule have been complied with in making the calculations.
(2) In calculating the contingent liabilities under unnratured long-term policies
referred to in sections 30( I ) and 31, a long-term insurer may adopt tiny reasonable bosis
which it thinks fit, provided it places a proper value upon the contingent liabilities
having regard t@--
(u) the rate of mortality among persons whose lives it has insured which has been
experienced in the past and which it estimates will be experienced in the
future;
(b) the rate of morbidity experienced in the past und which is expected to bc
experienced in the future;
~} 2 Nt), 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

/\ct No. 52, 1998 LONG-”rERM INSURANCE ACT, 1998

(c) the average rate of investment return which it has earned in the past and which
it estimates it will earn in the future in respect of such of its assets as relate to
the long-term insurance business concerned; and
(d) the expenses of the currying on of the. long-term insurance policy concerned,
including commissions and other expenses incurred in connection with the
receipt of applications for policies or the collection of premiums:
Provided that [he contingent liabilities as determined by means of such calculations are
not lower than they would have been had they been calculated on the minimum basis.
(3) Any estimate made by the long-term insurer in terms of’ subparagraph (2)((/), (b)
or (L) shtiil be subject to revision by the Registrar.
(4) In the calculation on uny bmis of contingent liabilities under this Part—
(a) no policy shall have a negative liability; and
(b) the capitalised value of any vested bonuses standing to the credit of tbe
policyholder on the date of calcultition, and the capittdised value of any
reduction of premiums which has been granted as a bonus or which hus been
obtained by the surrender of a bonus or by the giving ot’ any valuable
consideration or in any other way, shall be included in the contingent liability
of the long-term insurer under the policy concerned.
(5) Where a portion of a future premium is not contractually payable but can become
payable at the option of a policyholder, such portion of a future premium and the benefits
purchased thereby shall be disregarded, unless it will increase the liability of the
long-term insurer under that policy.

Mortality tables

7. A contingent liability under an unmatured long-term policy shall—

(a,) in the case of a life policy under which—
(i) the policy benefit to be provided is an annuity, be calculated—
(uc{) in respect of the period before the annuity commences, in
accordance with tbe ultimate mortality ttibles published by the
Actuarial Society of South Africa in the publication titled “S.A.
1956-62 Tables for Assured Lives”; and
(bb) in respect of the period from the date on which the annuity
commences, in accordance with the mortality tables published by
the Institute of Actuaries of England and the FacuIt y of Actuaries of
Scotkmd and titled “The a (55) Tables for Annuitants”; or
(ii) the policy benetit to be provided is another one thim an annuity, be
calculated in accordance with the ultimate mortality tables published by
the Actuarial Society of South Africa in the publication titled “S. A.
1956-62 Tables for Assured Lives”;
(b) in the case of an assistance policy, be calculated by using the mortality tables
titled “English Life Table No. 8 (Males)”;
(c) in the case of disability and health policies, be calculated by using the
mortality tables titled “S. A. 1956-62 Tables for Assured Lives” with an age
reduction of 3 years;
(d) in the case of tiny other long-term policies, where applicable, be calculated by
using the mortality tables titled “S. A. 1956-62 Tables for Assured Lives”; or
(e) in any other case, be calculated by using such other mortality tables as
upproved by the Registrar.

Morbidity tables

8. A contingent liability under on unmatured long-term policy shall—

(cl) in the case of a distibility policy providing long-term disability income
benetits, he calculated in accordance with the morbidity tables titled the
“ 1964 C o m m i s s i o n e r ’ s Distibility T a b l e s ” ;
94 No. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

(b) in the case of health policies or disability policies other than the policies
referred to in paragraph (u), be calculated in accordance with past experience
in the Republic modified by expected future trends; or
(c) in any other case, be calculated in accordance with such other morbidity table
as approved by the Registrar.

Rates of interest

9. The calculation of a contingent liability under this Schedule shall be based on a rate
of interest per annum of—
(u) 14 per cent in the case of a life policy under which an annuity is being paid;
(6) 10,5 per cent in the case of a disability or health policy under which policy
benefits have become payable in more than one payment;
(c) 5 per cent in respect of any business, other than annuities being paid at the date
of calculation, where any interest, dividends and rents attributable to such
business do not attract tax; and
(d) 4,5 per cent in any other case.

Method of calculating contingent liabilities

10. ( 1 ) For the purposes of the calculation of the contingent liability under an
unmatured long-term policy—
(u) such liability shall, in the case where the premium or any portion of the
premium paid by an individual or a group of persons insured thereunder is
paid by the long-term insurer concerned into an investment account or is used
by it to purchase units in an investment portfolio administered by it and
another portion of such premium (if any) is utilised for insurance cover upon
the death of such individual or a member of the group concerned, such
liability shall be the gross value of the portion in such investment account or
the units in such investment portfolio allocated to such long-term policy, plus
an amount calculated in respect of such insurance cover (if any) with due
regard to the difference between the amount payable upon the death of such
individual or member and the projected value of such portion or unit on the
date of such death: Provided that—
(i) the value of such portion shall be determined with due regard to, in the
case of an investment account, any vested bonuses accrued from such
portion to such individual or member or, in the case of an investment
portfolio, the price at which such units may be sold;
(ii) no amount shall be deducted from the gross value of such portion or units
in respect of future payments to be made from such investment portfo]io,
as the case may be;
(iii) allowance shall be made in such calculations for initial expenses incurred
by the long-term insurer concerned, which shall not exceed 120 per cent
of the maximum commission which may be paid to any intermediary in
terms of section 49 in respect of any recurring premium policy, sprea(i
over the full premium-paying term, separately for the initial premium
and each premium increase after inception, according to the following
formula:

Initial expense allowance at duration t =

Jx+t. 1
n- 1 -t
1,2 X total commission X x(l+j~
‘x:n-1
1
96 N(1. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

calculated at an interest rate of 4,5~0 with j = 8% for taxed business and

at an interest rate of 570 with j = 9% for untaxed business where

x = valuation age at entry,

n = min {max (10,75 – x), ppp} and
PPP = Premium P~Yi% Period

(iv) such liability shall—

(au) if any insurance cover is, in terms of the long-term policy
concerned, an amount guaranteed by the long-term insurer con-
cerned for the full period of the long-term policy concerned, in
return for an undertaking by the life insured under such contract to
pay a particular premium for such full period or until the occurrence
of the death of such individual or member of the group concerned,
he not less than the contingent liability which such long-term
insurer would have incurred under a long-term policy in terms of
which such long-term insurer undertook to pay such guaranteed
amount in the event of the occurrence of the death of such person or
member occurring during such full period of such long-term policy;
and
(bb) if any insurance cover is, in terms of the long-term policy
concerned, an amount guaranteed by the long-term insurer con-
cerned for a period shorter than the full period of the long-term
policy concerned, or if the long-term insurer concerned may, in
terms of such long-term policy increase the premium during the
period of such long-term policy, be not less than the contingent
liability which such long-term insurer would have incurred if such
long-term insurer undertook to pay such guaranteed amount in the
event of the occurrence of the death of such person or member
occurring during such shorter period or before the date on which the
long-term insurer may increase the premium, as the case may be;
(v) save for the allowance referred to in paragraph (iii) of this proviso, the
value of the said investment account or the said investment portfolio in
respect of a linked policy and a market-related policy defined in
paragraph 1 of Part I of this Schedule shall be equal to the value of the
corresponding assets as determined in paragraph 4(1) of Part 1 of this
Schedule;
(b) in the case of long-term policies, other than long-term policies referred to in
paragraph (a) in terms of which, in return for an undertaking to pay a
determined premium throughout the period of such policy, a long-term insurer
undertakes to pay a sum of money on the occurrence of the death of any
person or in the event of a person continuing to live throughout any period.
excluding any such policy in terms of which such long-term insurer
undertakes, in addition to any other amounts it undertakes to pay, to pay
amounts as bonuses which are guaranteed by such long-term insurer—
(i) the liability under such policy, in addition to the capitalised value of any
vested bonuses or reduction of premiums allowed by such long-term
insurer, shall be deemed to be the difference between the capitalised
value of the sum insured on the date as at which such Iitibilities are
calculated, according to the contingencies upon which that sum is
payable, and the capitalised value on the said dale of all future premiums
payable under such policy, as if each such premium was u moditied net
premium as detined in paragraph 5; and
98 Wo. lV21b ~UVt2KNMEN 1 ~ALEl lls, ZJ 3Erl12MDEK lYYO

Act No. 52, 1998 LONG-TERM INSURANCE ACT. 1998

(ii) the said cidcuiation shall be based on the exact age, on the date of
commencement of the insurance period in terms of the policy, of each
person whose life is insured in terms of the policy and on the exact age
of such person on the date as at which such liabilities are calculated, and
on an exact determination of all relevant periods; or
(iii) the calculation shall be based with reference to all the persons whose
lives are insured under such policies, on such ages and periods
mentioned in subsubparagraph (ii) as will produce a result which
approximates in the aggregate the result which would have been obtained
by means of a calculation made in accordance with that
subsubparagmph;
(c) the contingent liability in the case of any other long-term policy shall be
calculated by reference to the contingencies on which the policy benefits are
to be provided and as nearly as is practicable in accordance with this
paragrdph and paragrdph 4, 5, 6, 7 or 8, as the case may be.
(2) (a) The calculation of the initial expense allowance may not be based on the
current annual premium in respect of policies which have had premium increases since
inception as this will cause an understatement of the actuarial liabilities.
(b) In respect of policies which have had premium increases after inception, an
approximate method may be used.
(c) The approximate method may be based on the assumption that the total increase
in annual premium since inception occurred half-way during the past durdtion of the
policy as at the valuation date.
(d) In respect of future new business the valuator shall use an accurate method.

Minimum value of contingent liability under long-term insurance policies

11. Any contingent liability of a long-term insurer under any one unmatured
long-term insurance policy shall not be less than the guaranteed policy benefit to be
provided by the long-term insurer in terms of the policy if the policyholder on the date
as at which such contingent liability is calculated, exercised any right which he or she
may have in terms of such policy to cancel the policy and to receive payment of any
policy benefit which becomes payable or is to be” provided in the event of such a
cancellation.

Calculation of security reserve for disability and health policies

12. (1) The aggregate contingent liabilities calculated in accordance with this Part in
respect of disability policies and health policies shall be increased by a reserve the
amount of which shall be—
(a) in the case of a policy in terms of which the long-term insurer may adjust the
premiums at intervals of three years or less, 30 per cent; or
(b) in any other case, 50 per cent,
of the aggregate of the premiums payable in the period of 12 months ending on the date
of the valuation, under all those policies.
(2) The aggregate security reserve in respect of disability and health policies shtill not
be less than the amount of R 1,5 million, irrespective of the value determined in
accordance with subparagraph (1).

Additional reserves

13. (1) An AIDS reserve, which is appropriate in the opinion of the statutory actuary,
shaii be created.
(2) A mismatching reserve shall be created, which is appropriate in the opinion of the
statutory actuary, in reiation to all policy benefits the amount of which is payable in a
particular currency and in respect of which the assets are held in a different currency.
1 (n) No. 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52, 1998 LONG-TERM INSURANCE ACT> 1998

Reduction of contingent liabilities

14. The contingent liabilities under unmatured policies of a long-term insurer

calculated in accordance with this PM shall be reduced—
((/) by the contingent liabilities covered by approved reinsurance contracts; and
(b) in respect of each policy, by the amount of a premium which has not been
received by the insurer after deducting therefrom any commission and any
reinsumnce premium payable in respect thereof.

Valuation of other liabilities

1.5. ( I ) For the purposes of the methods of valuation refereed to in sections 30 and 31,
the value of the liabilities of a long-term insurer, other than its contingent liabilities
under unmatured policies, shall be determined in accordance with Generally Accepted
Accounting Practice.
(2) Notwithstanding subparagraph (1), any liability of a long-term insurer in respect
of which its creditor has waived any right to have the obligation discharged until all
obligations to other creditors have been discharged in full, shall be valued in a manner
and for an amount determined by the long-term insurer and approved by the Registrw.

Schedule 3

(Section 30)

Financial soundness method of calculation of value of assets and liabilities ‘

Financial soundness method

1. The value of assets and liabilities referred to in section 30(1)(a) and (b) shall be
deemed to have been calculated by the financial soundness method if the applicable
requirements of this Schedule and the guidelines issued by the Actuarial Society of’
South Africa in concurrence with the Registrar, have been complied within making the
calculations.

Amounts to be disregarded

2. For the purposes of the calculation of the value of assets by the financial soundness
method, there shall be disregarded—
(~f) an amount of premium which is due and payabIe but unpaid, including a
premium debited to an intermediary or a deferred installment of a premium;
(b) an amount, other than a premium, which remains unpaid after the expiry of a
period of 12 months from the date on which it became due and payable;
(c) an amount representing administrative, organisational or business extension
expenses incurred directly or indirectly in the carrying on of long-term
insurance business;
(d) an amount representing goodwill or an item of a similar nature;
(e) an amount representing a long-term policy in terms of which the long-term
insurer concerned provides or undertakes to provide a policy benefit;
(f) an amount representing a prepaid expense or a deferred expense; and
(g) an amount representing a reinsumnce contract in terms of which the long-term
insurer is the policyholder, except to the extent that it represents a claim
against a reinsurer in terms of the reinsurance contract.
102 N(I. 19276 CA) VbKNMbN 1 CJA.LE1 lb 23 >CI’l EMDEK lYY5

Ad No. 52, 1998 LONG-TERM INSURANCE ACT, 1998

Calculation subject to certain provisions

3. For the purposes of the calculation of the value of contingent liabilities by means
of the financial soundness method—
(u) after taking into account the termination capital adequacy requirements
according to the guidelines referred to in paragraph 1, no policy shall have a
negative liability;
(b) where the valuation of net liabilities under unmatured policies is done on the
assumption that premiums are payable annually in advance, an appropriate
deduction in respect of deferred installments of premiums must be made, and
the same assumption must apply as regards expenses;
(c) where a portion of a future premium is not contractually payable but can
become payable at the option of the policyholder, such portion of a future
premium and the benefits purchased thereby shall be disregarded, unless it
causes an increase in the net liability, in which case it shall be valued;
(d) no allowance shall be made for potential profits to be earned from long-term
insurance policies which the long-term insurer may enter into in future; and
(e) such value shall include the amount of capital adequacy requirements as
determined by the guidelines referred to in pwagraph 1,

Only certain assets to be valued

4. For the purposes of the calculation of the value of assets referred to in section 30( 1 )
only such assets actually held by the long-term insurer or those approved by the
Registrar in terms of section 34( 1 )(a) and (b), may be taken into account.

AIDS reserve

5. An AIDS reserve, which in the opinion of the statutory actuary is appropriate, must
be created, to provide for a possible deterioration of current mortality and morbidity
experience as a result of AIDS.

Effect of reinsurance

6. The contingent liabilities under unmatured policies shall be net of contingent

liabilities covered by approved reinsurance contracts as defined in P&rt 11 of Schedule 2.

Valuation of other liabilities

7. The liabilities of a long-term insurer, other than its contingent liabilities under
long-term policies, shall be determined in accordance with Generally Accepted
Accounting Practice.
104 N(). 19276 GOVERNMENT GAZETTE, 23 SEPTEMBER 1998

Act No. 52.1998 [Link]-TERM INSURANCE ACT, 1998

Schedule 4

(Section 73)

Repeal and amendment of laws

Act no. and year Short title Extent of

repeal
27 of 1943 Insurance Act, 1943 The whole, excluding
section 60( 1 )f.f)
19 ot’ I 945 Insurance (Amendment) Act, 1945 The whole
73 Of 1951 Insurance (Amendment) A~L 195 I The whole
24 ot’ 1956 Pension Funds Act, 1956 Section 39
25 of 1956 Friendly Societies Act, 1956 Section 50
79 of I 959 Insurance Amendment Act, 1959 The whole
10 of 1965 Insurance Amendment Act, 1965 The whole
4 I of 1966 Insurance Amendmen( Act, 1966 The whole
65 of’ 1968 Financial Institutions Amendment Act. 196$3 Sections I to 3, inclusive
39 of 1969 Insurance Amendment Act, 1969 The whole
23 of 1970 Financial Institutions Amendment Act, 1970 Section I
75 of 1970 , Second Financial Institutions Amendment Section 1
Act, 1970
91 of 1972 Financial Institutions Amendment A@ 1972 Seclimrs I to 4, inclusive
1() 1 of 1976 Financial Institutions Amendment Act, 197 6 Sections I to 15, inclusive
94 of 1977 Fimrncial Institutions Amendment Act, 197 7 Sections 1 to 8, inclusive
80 of I 978 Financial Institutions Amendment Act, 197 8 Sections I to 6, inclusive
103 of I 979 Financial Institutions Amendment Act, 1979 Sections I to 12. inclusive
99 of 1980 Financial Institutions Amendment Act. 1~~O Sections J to 22, inclusive
360t’ 1981 Financial Institutions Amendment A@ 198 I Sections I to 4. inclusive
82 of 1982 Financial Institutions Amendment Act, 198 2 Sections I to 2, inclusive
46 of 1984 Corporation for Public Deposits A~t, 1984 Section 20
86 of I 984 Financial Institutions Amendment A@ I ~~ 4 Sections 1 to 11, inclusive
106 of 1985 Financial Institutions Amendment Act, 1985 Sections I to 9, inclusive
50 of 1986 Financial Institutions Amendment Act, 1986 Sections I to 8, inclusive
5 I of 1988 Financial hrstitutions Amendment Act, 198 8 Sections I to 2, inclusive
54 of 1989 Financial Institutions Second Amendme m Sections I to 19, inclusive
Act, 1989
64 ot’ 1990 Financial Institutions Amendment Act, 1990 Sections I to 8. inclusive
54 of I 99 I Financial institutions Amendment Act, 1991 Section 1
119L)f 1991 Financial institutions Second Amendme nt Sectiun I
Act, 1991
41 ot’ 1992 Financial Services Board Amendment Act. The reference to the insur-
J 99X ance A c t , 1943, i n the
Schedule
83 of I 992 Financial institutions An~endment Act. 19 92 Sections I to 13. inclusive
7 L)f 1993 Financiitl Institutions Amendment Ac(, 1993 Section I
I 04 of i 993 Financial Institutions Second Arnendm ent Sections I to20, inclusive
Act, 1993
l130f 1993 Income Tax Act. 1993 Sections 63 to 66, inchl-
sive
I 40 of I 993 Revenue Laws Amendment Act, 1993 Section I
54 of 1996 Insuran ceArnendtnentAct, 1996 The wh(A!
31 of I 997 Insurance Amendment Act, 1997 The w hole
—