The registrar of the FSB found that Orange was liable for claims arising from insurance policies that were issued by Fleetsure and Valuline 155 (trading as Fusion Underwriting Agency) on behalf of Orange. This is because Orange had entered into a binder (white-label) agreement with both companies and failed to properly manage its relationships with Fleetsure and Fusion.
Binder agreements are agreements in terms of which an insurer authorises another party to enter into policies on its behalf, where that party acts as if it is the insurer.
The FSB says the ruling has major implications for all insurers because it underlines that insurers are responsible for parties that act on their behalf.
Orange now has to settle all outstanding claims arising from policies issued by Fleetsure and Fusion for the period during which Orange was the underwriter.
In light of the decision, the registrar is considering further action to ensure that the claims of policyholders will be met. This does not preclude policyholders whose claims have not been paid from approaching Orange directly for payment or taking legal action.
The appeal board ruling follows complaints dating back to 2009 to the office of the Ombud for Financial Services Providers, who handed down three rulings in favour of policyholders before referring the matter to the FSB. (A ruling by the financial services ombud has the same legal standing as a court order.)
The FSB suspended Orange’s financial services provider licence early last year.
[Information from Iol.co.za]