The Financial Services Regulatory Authority (FSRA) of Eswatini has informed Parliament that licensed insurers in the country have been operating within international standards regarding rejected insurance claims over the past three years. FSRA Chief Executive Officer Ncamiso Ntshalintshali provided this information during a meeting with the Finance Committee, chaired by Lobamba Lomdzala MP Marwick Khumalo. The committee had requested a report on the conduct of insurance companies due to concerns that some insurers were avoiding their responsibility to settle claims.
The FSRA CEO explained that disputed claims often involve disagreements between insurers and policyholders over whether a claim meets the requirements for payment. He cited the Tesco matter in Matsapha as an example, where the company's facility was destroyed by fire last year, resulting in stock worth approximately E30 million being lost. Ntshalintshali emphasized that an insurance arrangement is based on two key documents: the insurance schedule and the insurance wording.
Ntshalintshali further elaborated that the insurance schedule outlines the insurer, the insured, and the amount covered, while the insurance wording details the responsibilities of the insured and the requirements that must be met when a claim is made. He noted that the wording is technical, supported by assessments from experts, reports from fire services, municipalities, and other requirements that the insured entity is expected to meet.
According to Ntshalintshali, disputes can arise over whether a policyholder received the policy document and was aware of the requirements for the insurance cover to apply. In the case of Tesco, some confirmations were received after the fire incident, while others were received through the entity's intermediary. Another issue raised was tax information, which the FSRA could not confirm due to confidentiality and the involvement of the Eswatini Revenue Service (ERS).
The FSRA CEO also mentioned that the regulator faced difficulties in establishing the amount and quantity of stock destroyed in the fire, as the necessary information had not been provided by the complainant. He stated that the matter involves the ERS and that the courts would ultimately be the platform to determine some of the disputed issues. Ntshalintshali emphasized that the FSRA had not been able to hold either the intermediary or insurer accountable due to the ongoing process.
Ntshalintshali informed the committee that the FSRA has the power to sanction financial institutions that fail to meet specific compliance requirements. He stated that the regulator can revoke the license of a financial services provider that is found not to be offering safe and sound products and services. However, he emphasized that such action must follow the law, with the affected institution given a fair opportunity to explain why its license should not be revoked.
The FSRA CEO also highlighted the importance of consumer education and financial inclusion in promoting public knowledge of financial services. He stated that the regulator's mandate is to promote education and knowledge of financial services among members of the public. The FSRA's consumer education and financial inclusion department works to improve public understanding of financial services, providing essential information to policyholders.
Key points
- The FSRA has found that licensed insurers in Eswatini have remained within international benchmarks regarding rejected claims over the past three years.
- Disputed claims often involve disagreements between insurers and policyholders over whether a claim meets the requirements for payment.
- The FSRA has the power to sanction financial institutions that fail to meet specific compliance requirements, including revoking licenses if necessary.
