Investigate Legal Shield, law firms ask11 complain of outstanding payments An argument is put forward that there is no reason for the company not to be in a position to pay its service providers.
The complaint emanates from a court challenge lodged by legal firm Kruger,
ISG Namibia, which handed in the complaint on behalf of the firms, maintains that the
“Both insurers and banks are regulated entities with statutory reserve requirements.
If it is the case that these entities within the group are under overlapping control, there exists the risk of funds being transferred from one to the other to create the impression, when observed at a given point in time, or for a short period, that reserve requirements are being met,” De Klerk argued.
He suggested that Namfisa should investigate this possibility and requested that such an investigation be coordinated by the central bank.
The argument is also made that Legal Shield, as a matter of course, should generate enough money to pay service providers.
According to a sample contract, the lowest premium payable for Legal Shield cover alone is N$111.80 per month. With 60 000 policyholders, Legal Shield should, therefore, collect at least N$6.7 million per month, and N$80.5 million per year.
Therefore, the argument goes, it is unlikely that Legal Shield cannot honour its insurance contracts, unless, De Klerk says, Legal Shield is not keeping to its statutory reserve requirements.
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