Short-term Insurance Act, 1998 (Act No. 53 of 1998)Prescribed requirements for the minimum amount of the security to be provided by or on behalf of a Lloyd’s underwriter |
Board Notice 28 of 2010
Financial Services Board
1) | I, Dube Phineas Tshidi, Authority of Short-term Insurance, hereby prescribe, under paragraph 4 of Schedule 3 of the Short-term Insurance Act, 1998 (Act No. 53 of 1998), the requirements for the minimum amount of the security to be provided by or on behalf of a Lloyd's underwriter, as set out in the Schedule hereto. |
2) | This Board Notice will come into effect on 28 February 2010. |
D P Tshidi,
Authority of Short-term Insurance
Prescribed requirements for the minimum amount of the security to be provided by or on behalf of a Lloyd's underwriter
(Paragraph 4 of Schedule 3 of the Short term Insurance Act, 1998)
1) | The value of the minimum amount of the security to be provided by or on behalf of a Lloyd's underwriter is an amount equivalent to - |
a) | the estimated amount payable by the underwriter in respect of claims which have been incurred under South African short-term insurance policies and reported but not yet paid; less |
b) | an allowance in respect of reinsurance cover held, which allowance shall be a percentage of the amount contemplated in item (a), calculated by the formula- |
A-B *100
A
in which formula-
A - represents the premium income received by all Lloyd's underwriters under all short-term insurance policies underwritten by them less brokerage and commission; and
B - represents the amount of A less all premiums paid for reinsurance cover held by those underwriters, during, in the case of both A and B, the latest calendar year prior to the calculation as reported in the most recent published Global Results of Lloyd's available at the time and approved by the Authority; plus
c) | a provision for claims incurred but not yet reported equal to 7% of the total net amount of the premiums under South African short-term insurance policies received by or on behalf of the underwriter at Lloyd's Policy Signing Office during the year ended on the last day of the quarter concerned. |
2) | For the purpose of item (c) of paragraph (1) "net amount" means the net amount after deduction of the aggregate of- |
a) | the same percentage of such total premiums as the percentage contemplated in item (b) of paragraph (1), in respect of reinsurance cover held; |
b) | the aggregate of the refunds made by or on behalf of the underwriter during the year in respect of premiums under South African short-term insurance policies; |
c) | brokerage and commissions in respect of the premiums concerned; and |
d) | any tax payable on the premiums concerned, other than taxes payable on net income. |
Provided that only premiums received and refunds made on or after the date of commencement of section 60 of the Short-term Insurance Act shall be taken into account for that purpose.
3) | Short title - this Notice is called the Notice on the Prescribed Requirements for the minimum amount of the security to be provided by or on behalf of a Lloyd's underwriter, 2010. |