As one of Southern Africa’s leading short-term insurers, Mutual & Federal takes great pride in the business partnerships it holds, and goes to great lengths to make sure that we only partner with intermediaries with similar business integrity standards as ours and those who have met our technical infrastructure requirements.
The Intermediary Services Agreement (ISA) serves as our contractual terms of reference and we place an equal amount of importance on adhering to good business practices and requirements under FAIS legislation and the code of conduct. Our partnerships are based strongly on proven compliance of these principles. We enforce stringent requirements to grant administrative rights on mfonline by means of an additional Service Level Agreement that stipulates data requirements and in particular disclosure of material facts.
We have the duty of performing regular audits on the integrity and quality of data to ensure the business and legislative standards are being upheld. A recent analysis has indicated serious discrepancies from the incomplete/inaccurate capturing of client information on mfonline, which heavily compromises our data integrity. The errors captured undoubtedly puts pressure on the material risk of the entire portfolio, skewing our liability weighting and affecting our ability to write and price business correctly. Ultimately our mutual clients are affected through this.
We task and trust our intermediaries who have been granted administrative permissions on mfonline, to be solely responsible and accountable for the accurate and complete capturing of client information, which includes any claims and/or losses incurred by the client in the last five years.
Legally, Mutual & Federal is required to ask the client/intermediary to declare and sign that all information provided on the declaration page of the signed contract is accurate and complete. As such Mutual & Federal will not be held liable for inaccurate data supplied by the client/intermediary that may result in inadequate cover and incorrect pricing for risk.
Urgent action will be applied to existing policies that indicate risk inaccuracies and will result in one or more of the following repercussions, depending on the merit of each case:
We are in the business of advising and protecting our mutual clients and it is our responsibility to advise that incorrect data given by the client is a risk to them. Furthermore, incorrect capturing by the intermediary of clients’ disclosed data may have legal repercussions.
We are also cognisant of the recent court ruling regarding (major or minor) loss non-disclosure that have highlighted this issue as a priority for all, and we must address this to afford our clients the assurance of adequate protection and cover.
This also serves to protect our respective businesses and our partnership and therefore we trust that you will work with us as we put in place additional remedial activities such as:
It is necessary to stress not only the legal implications of this, but also the reputational damage for both intermediary and insurer that can be caused by clients discovering that they have been inadequately covered and will not be paid out following a loss or occurrence. This reputational damage further stretches to negatively affect the perception of the ethics of the entire insurance industry.
I look forward to your continued co-operation and partnership as we work to strengthen every detail and process of our business operations. Please contact your relevant Portfolio Manager should you need more information on the data capturing and disclosure process.
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