HIGHER CERTIFICATE IN INSURANCE
Question Book
For candidates in Botswana - conducted by the Botswana Accountancy College
Do not open this question book until told to do so.
JUNE 2019
3110
Insurance Law Short Term
Write your answers for all questions in the Answer Book provided. Pay attention to how many marks are
allocated to each question or part of the question. This will guide you as to how long your answer needs
to be. Remember that your answers should contain sufficient facts to be awarded the available marks and
to convince the marker that you can adequately explain the matter concerned. Mark the number of the
questions that you have completed in the blocks below.
PART B
PART A
1
Section 1
2
3
4
PART C
Section 2
5
6
7
8
9
10
11
12
Total
E
X
A
M
I
N
E
R
’
S
M
A
R
K
S
When finished, return this Question Book, together with the Answer book in the plastic sleeve provided
by the invigilator(s) for transmission to the IISA for marking.
Time and Marks Allocation

Three hours are allocated for this assessment.

The assessment carries a total of 100 marks.
PART
MAX MARKS
No QUESTIONS TO ANSWER
A
20
2
B
55
7
C
25
1
Total
100
10
Learner Name
ID Number
Candidate No.
Code of Examination Conduct for Candidates
1.
Examination candidates are required to follow the instruction(s) of the designated examination
official(s) at all times.
2.
All candidates must ensure that they have signed the “candidates listing” before they leave and that
the spelling of their name is correct, as certificates are compiled from this list.
3.
Candidates may not have on, or about their person, any of the following in the examination room
during the examinations:
3.1
a cellular/mobile telephone;
3.2
any notes or documents, other than their Examination Admission Permit and Identity
Document or documents specifically allowed;
3.3
electronic communication or storage device;
3.4
a firearm or any other dangerous weapon;
3.5
intoxicating liquor or any mind altering drugs.
4.
No smoking is permitted in the examination room.
5.
Candidates may not leave their seats without the express permission of an examination official.
Candidates should remain seated and raise their one hand to attract the attention of the examination
official.
6.
A candidate shall be guilty of misconduct if he/she
6.1
intentionally or negligently contravenes or encourages any other person to contravene a
code, regulation, bye-law, rule or instruction of the Botswana Accountancy College (BAC);
6.2
is under, or is suspected to be under the influence of intoxicating liquor or any other
substance;
6.3
behaves in a threatening, insulting, disorderly, improper or unbecoming way in, or in the
immediate vicinity of, the examination room;
6.4
converses or in any way communicates with, or willingly receives communication from any
person in the examination room other than the examination officials;
6.5
reads, or attempts to read, the work of any other candidate.
7.
Candidates should sign this declaration confirming that they:
7.1
have noted and are in compliance with the instructions as announced by the presiding
examination official and/or as reflected herein;
7.2
understand and accept those instructions, and
7.3
agree to comply with the rules and regulations of the Botswana Accountancy College.
Failure to adhere to the above may result in disciplinary action being taken against the candidate in terms
of the Botswana Accountancy College’s disciplinary procedures and could lead to suspension from further
Botswana Accountancy College examinations.
___________________
Date
HCiI_3110 Botswana 06/19
____________________
Candidate’s Signature
PTO
Complete the answers for all of the questions in the answer book provided.
Ensure that your name, ID and candidate numbers are written clearly on
each page of the answer book.
REMEMBER



Your answer should contain sufficient facts to warrant being
awarded the available marks and be of reasonable length to
convince the marker that you can adequately explain the matter
concerned.
Start the answer for each question on a new page.
Number all answers clearly.
PART A
BOTH questions in this part should be answered. Each question carries 10 marks.
MAKE SURE THAT YOU NUMBER YOUR ANSWERS CORRECTLY.
1
True or False – Indicate whether each of the following statements are true or false. If false,
please explain why.
1.1
The office of the FAIS Ombudsman in South Africa is governed by the Short Term
Insurance Act.
1.2
The onus of proof in a criminal case rests with the State.
1.3
In marine insurance insurable interest need only exist at the time of the loss.
1.4
A private company must include the word “Proprietary” or “Pty” in its name.
1.5
It is possible to name a beneficiary to receive the proceeds of a retirement annuity if the
purchaser should die before retirement.
1.6
The phrase “volenti non fit injuria” means “he who consents cannot be injured”.
1.7
Sentimental damages may be awarded by a court of law as consolation for injured feelings
caused by someone else.
1.8
The maximum cover that can be offered under a policy classified as “assistance business” in
South Africa is R15 000.
1.9
Any money received as proceeds of a lottery are exempted from capital gains tax in South
Africa.
1.10 In South Africa, a natural person must be provided with a copy of the insurance policy that
he has taken out within 60 days.
(1 mark each = total 10 marks)
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2 Provide a definition for each of the following terms:
2.1 Juristic person
2.2 Taxable income
2.3 Insurable interest
2.4 Non-profit company
2.5 Vicarious liability
(2 marks each = total 10 marks)
PART B
This part consists of two sections, in the first section ALL FIVE questions are compulsory.
Each question carries 5 marks.
In the second section TWO OF THREE questions must be answered.
Each question carries 15 marks.
If you answer all three questions, only the first two in your answer book will be marked.
MAKE SURE THAT YOU NUMBER YOUR ANSWERS CORRECTLY.
Section 1:
ANSWER ALL 5 QUESTIONS
3
List five (5) different benefits that may be payable from the unemployment Insurance Fund.
(5 marks)
4
Briefly explain the concept of proximate cause as it is applied in insurance law.
5
Discuss Estate Duty and Donations Tax in South Africa, including the rate of tax payable, etc.
(5 marks)
6
(5 marks)
Outline the solvency requirements placed on short term insurers in South Africa effective from
January 2012.
(5 marks)
7
Explain the implications of the South African Protection of Personal Information (POPI) Act with
specific reference to the insurance industry.
(5 marks)
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Section 2:
ANSWER ONLY 2 OF THE 3 QUESTIONS
8
List and briefly explain the duties of the agent in law.
(15 marks)
9
Read the article below on The Momentum Lesson and then discuss the case with reference to the
legal basis that should have been applied to the situation.
(15 marks)
The Momentum lesson: Following the law is not enough
Financial services sector has to move past compliance.
Patrick Cairns / 3 December 2018
When Momentum declined to pay out Nathan Ganas’s life insurance policy, it wasn’t being malicious.
It wasn’t even being greedy. It was following the law.
It also wasn’t the first life insurer to refuse a claim on the grounds of a non-disclosure that had nothing
to do with the cause of death. There are a number of people in the industry who have acknowledged
that their underwriting may well have come to the same conclusion.
Legally, their argument is sound. Ganas had a condition that would have precluded him from being
insured in the first place. He should not have qualified for life cover, and therefore the claim should
not have been paid out.
The reason really is to protect everyone else that Momentum has insured. They are all in the same
risk pool that has to be carefully managed. If large numbers of people are not paying premiums that
match their level of risk, the sustainability of the pool as a whole could be jeopardised.
The regulator says…
Why then, was there such an outcry? And why has the Financial Sector Conduct Authority (FSCA,
formerly the FSB) noted that Momentum’s decision to change its mind and pay out the Ganas claim
“reflects the spirit of discussions between the FSCA and Momentum”?
This is quite a statement for the regulator to make. It makes it clear that it is no longer satisfactory
for financial services companies to show that they are following the law. They have to show that they
are acting with fairness and in the best interests of their customers.
Consider that a life insurer could be accepting premiums from a client for decades only to refuse the
claim at the time of death on the basis of a non-disclosure. There’s an asymmetry there that needs
to be addressed.
Surely it is fair to ask what the company was doing during all of that time to make sure that it was
accepting those premiums in good faith? Shouldn’t it take responsibility for ensuring that it is going
to deliver value for money?
Bear in mind that, in the event of a death-benefit claim, the client has no way of testing the efficacy
of the policy before they need it. It’s not like a microwave oven that you can take back to the store if
it doesn’t work. You only know if you’re going to get what you’ve been paying for when it’s too late
to do anything about it.
The client’s responsibility
It’s true that there is a reciprocal relationship in play. The insurer can argue that the client needs to
act in good faith too. If you take out a policy, it’s your responsibility to be honest when giving your
medical history.
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However, consider the variables in play. Firstly, you are relying on your memory. Can an insurer
genuinely expect you to remember all of the things you may or may not have been diagnosed with,
particularly if you do not receive ongoing treatment?
You might also not know what is significant and what isn’t. It’s fine to say disclose absolutely
everything, but there’s only so much room on the form.
Terminology can also be an issue. Do you suffer from paraesthesia, for example? You do if you have
pins and needles, but would you necessarily know that?
What about the role of the broker who helped you take out the policy? There is anecdotal evidence
of brokers disregarding parts of a client’s medical history when filling out the medical history to ensure
that policies are not rejected.
While the standards of financial advice are improving, there is no question that there are still brokers
whose primary interest is in getting the policy through so that they can earn the commission. It’s
wasted time for them if the insurer rejects an application.
It is even possible that a doctor may have made a diagnosis that you were never informed about.
You can’t disclose information you never had, but the insurer could reject your claim because of it.
Solving the problem
Given all that can go wrong, can insurers then still in good conscience place all the responsibility on
the client? That is a question that the industry now has to face with a great deal more introspection.
In the short term, this may require some kind of trade-off. Insurers need to protect their risk, and that
may mean that they will ask for more thorough medical tests upfront from everybody taking out a
new policy. That’s not ideal either, however, as it would almost certainly reduce the uptake of these
products because of the extra effort involved.
The ultimate solution, however, is hopefully far simpler. Personal electronic medical records would
be ideal, in that a client’s entire medical history would be available from the start. There would be no
disclosure requirement, and insurers could make more accurate risk assessments.
That, however, may still be some way off in South Africa. What may be more realistic in the next few
years is using artificial intelligence to both collect medical information and assess client risk in other
ways when the policy is taken out. The technology is developing so fast that it will surely be able to
deliver accurate assessments before too long.
It is now obvious that waiting until the claims stage to underwrite a life policy is inherently problematic
for the reasons the Ganas case has highlighted. Insurers have to move beyond that. Those that do
it first, and do it successfully, may just give themselves a big competitive advantage.
OR
10
Write an essay on the elements of a delict in the law of delict, listing the main elements and briefly
explaining the application of each.
(15 marks)
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PART C
ANSWER either Question 11 or Question 12 for 25 marks.
If you answer both questions, only the first one in your answer book will be marked.
MAKE SURE THAT YOU NUMBER YOUR ANSWERS CORRECTLY.
11
Write an essay on the law of evidence as it applies in South African courts of law, covering the
concept of the law of evidence, different types of evidence the admissibility of evidence and the
presentation of evidence.
(25 marks)
OR
12
Discuss each of the following in terms of their legal standing:
12.1 natural persons, including some discussion on minors, married persons, mentally ill or
mentally disabled persons, drunk people, prodigals, insolvents and people under curatorship;
12.2
12.3
(12 marks)
businesses, including sole proprietors, partnerships and the different types of juristic persons,
being the different types of companies and close corporations;
(8 marks)
trusts, including inter vivos trusts, testamentary trusts, charitable trusts and trading and
business trusts.
(5 marks)
(Total 25 marks)
DID YOU REMEMBER
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

to complete the panel on the front of this book?
to sign the declaration on the inside cover?
to write your name, ID and candidate numbers on all loose
pages?
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