Collecting premiums yourself: what section 45 asks of a South African brokerage

Contents

1. What a section 45 authority is, and what it does to risk
2. The four duties that an audit actually tests
3. A month-end that survives inspection
4. The exemptions you have heard about, and who they are for
5. What this changes in the payment message you send
6. Frequently asked questions

The request usually arrives in a chat thread and sounds harmless. A commercial client wants to pay the brokerage rather than deal with three separate insurer references; a domestic client asks whether they can EFT you the funeral premium because the debit order date never suits their salary. Saying yes turns a brokerage into a collector of other people’s money — a regulated activity with its own written authority, its own security, its own bank account and its own monthly deadline. Saying yes informally, without any of that, is where audits and Ombud files begin.

Here is what section 45 of the Short-term Insurance Act actually requires, what the long-term equivalent looks like, which of the FSCA exemptions you keep hearing about apply to a normal brokerage, and what all of it changes in the message you send a client about payment.

What a section 45 authority is, and what it does to risk

Section 45 of the Short-term Insurance Act 53 of 1998 is short and blunt: an independent intermediary may not receive, hold or in any other manner deal with premiums payable under a short-term policy unless the insurer has authorised it in writing and the prescribed security is in place. The Insurance Act 18 of 2017 moved prudential supervision onto a new footing but left the conduct provisions of the 1998 Act — section 45 among them — standing until the Conduct of Financial Institutions Bill replaces them. It is current law, not legacy.

The provision matters because of what it does with risk. Payment of a premium to an intermediary authorised under section 45 is deemed to be payment to the insurer. The moment the client’s money reaches your premium account, cover responds — even if the money never reaches the insurer, even if your business fails the following week. That is excellent protection for the policyholder and an obvious exposure for the insurer, which is why the authority comes with security: a guarantee, usually written through the Intermediaries Guarantee Facility, the industry-owned facility set up for exactly this purpose. Life business follows the same logic through the Long-term Insurance Act and its regulations.

Two things follow for a brokerage principal. First, the authority is per insurer and in writing — a binder agreement, an agency code or years of practice do not create it. Second, if the guarantee lapses or is too small for what you now collect, you are collecting without authority, whatever the paperwork in the drawer says.

The four duties that an audit actually tests

1. A current written authority for each insurer whose premiums you touch. Keep the signed version, not the email agreeing in principle, and re-check it when the insurer changes underwriting agency or when your own licence categories change.
2. Security sized to what you collect. The guarantee is not a formality at inception — it should be reviewed when the book grows, when you take on a scheme, or when you move from monthly to annual collections.
3. A separate bank account that holds policyholder premiums and nothing else. Regulation 4.2(3) under the short-term Act and regulation 8.2(2) under the long-term Act say the same thing. It is not the operating account with a nickname; commission comes out of it only once it is due to you. Where an exemption from that requirement is sought, it is the insurer who must apply for it, not the intermediary.
4. Banking and reporting on the clock. Cash premiums go into that account within one business day. Within 15 days after the end of each month, the insurer gets both the money and a return covering the premiums received, the commission payable to you and the amounts paid over.

The fourth duty is the one that quietly breaks. A brokerage that collects for six insurers is running six month-end reconciliations against a single bank account, usually in a spreadsheet, usually by one person. The failure mode is never theft; it is an unallocated deposit, a client who paid with no reference, or a WhatsApp screenshot nobody matched to a statement line.

A month-end that survives inspection

When	What must have happened	Where the evidence lives
Day of receipt	Cash into the premium account within one business day; EFT matched to a client and a policy	Bank statement line, allocated to the policy record
Within 48 hours	Unallocated receipts chased — the client is asked for the reference, not for a screenshot	The conversation thread, on the client record
Month end	Premium account reconciled per insurer; shortfalls and overpayments listed by policy	Reconciliation pack, signed off by someone other than the preparer
Within 15 days of month end	Payment over to each insurer and the return: premiums received, commission payable, amounts paid	Proof of payment plus the return as submitted

The exemptions you have heard about, and who they are for

There is a second track in this market: direct collection, where the premium goes straight into the insurer’s account and the intermediary merely supports the process. The FSCA created room for it in 2020 with INS Notice 19 of 2020 for short-term and INS Notice 20 of 2020 for long-term business, which recognise “accounting for premium” — the activities an independent intermediary performs in support of collection directly into the insurer’s account, including the technology that enables it — and lift restrictive remuneration provisions for firms that meet the conditions.

The extension notices that followed are narrower than the corridor talk suggests. INS Notice 1 of 2024 and INS Notice 2 of 2024 ran the relief on to 31 March 2027, but they apply to independent intermediaries whose primary business is not the rendering of intermediary services, where the policy is ancillary to another commercial or credit agreement — retailers, credit providers, service businesses adding cover to something else they sell. A conventional brokerage does not get to skip the premium-only account on the strength of them. Read the notice that names your situation before you assume relief; the conditions in the 2020 notices still apply to anyone relying on the framework.

Longer term, the Conduct of Financial Institutions Bill is expected to reclassify premium collection as an outsourced function rather than an intermediary service, which changes how it is authorised and how it is paid for. That is a reason to keep the reconciliation clean now, not a reason to wait.

What this changes in the payment message you send

Most of the practical damage happens in the chat, not in the ledger. Four rules keep the two aligned.

• One destination, one reference, never changed mid-thread. If your client is used to paying the insurer directly, a message from you with new banking details is indistinguishable from the fraud they have been warned about. Where the insurer collects by debit order, you are not the collector at all — the mandate, the reversal window and the dispute route are covered in our guide to debit order disputes and the 60-day rule.
• A screenshot is not a receipt. Proof-of-payment images are trivially edited. “Received, thank you” goes out after the credit appears in the premium account, and the message that confirms cover says which policy the payment was allocated to.
• Deemed payment cuts both ways. If a client paid you and the insurer issues a lapse notice, the client is covered and you have a reconciliation failure to fix today — before it becomes a repudiated claim and a complaint about your firm rather than the insurer’s.
• Keep the instruction and the confirmation on the client record, not in one adviser’s phone. Wording that works for the reminder itself sits in our premium reminder use case, and the market context for South African collections is in the South Africa country guide.

This is the part a WhatsApp CRM can carry. ORIS does not move money and has no payment or billing function — what it does is keep the payment instruction, the client’s reply and the confirmation attached to the customer record in a shared inbox, send reminders from Meta-approved utility templates ahead of the collection date, flag the clients who go quiet after a failed collection through the risk score, and export customers and conversations to CSV so the month-end pack has the conversation trail behind each disputed line. If you want to see what that looks like next to a reconciliation, take the product walkthrough.

Frequently asked questions

Can we collect premiums if the insurer has never given us written authority?

No. Section 45 prohibits an independent intermediary from receiving, holding or otherwise dealing with short-term premiums unless authorised in writing and unless the prescribed security is in place. An agency code, a binder mandate or long practice is not an authority, and “the client insisted on paying us” is not a defence.

If we collect and never pay the insurer, is the client still covered?

Yes — payment to an intermediary authorised under section 45 is deemed payment to the insurer, which is precisely why the insurer requires a guarantee before granting the authority. The client’s cover is protected; your firm’s position, and your relationship with that insurer, is not.

Do the FSCA exemptions mean we no longer need a premium-only bank account?

Not for a normal brokerage. The 2024 extension notices target intermediaries whose primary business is not intermediation and where the cover is ancillary to another commercial or credit agreement. Any exemption from the separate-account requirement in the regulations must in any event be applied for by the insurer, not by the intermediary.

What is a realistic month-end deadline for our team?

Work backwards from the 15-day rule rather than towards it. If the return and the payment must be with each insurer within 15 days of month end, the reconciliation needs to be finished several days earlier, which means unallocated receipts have to be chased during the month — not discovered on day 12.

Does COFI change any of this?

It is expected to, by treating premium collection as an outsourced function rather than an intermediary service, with its own authorisation and remuneration logic. Until that legislation is in force, section 45 and the regulations under both insurance Acts apply as written.