SA Insurance Groups Advised on New Consumer Act

SA insurance groups adviced to accommodate the new Consumer Protection Act This act prevents exploitation of consumers.

A commercial law firm has advised South African insurance groups to adapt their services to accommodate the new Consumer Protection Act.

The main purpose of this act is to prevent the exploitation of consumers and prevent them from being harmed. The rights of consumers are recognized in this act and places certain obligations on suppliers of goods and services.

The Consumer Protection Act replaces five existing acts, namely: the Unfair Business Practices Act of 1988, the Trade Practices Act of 1976, the Sales and Service Matters Act of 1964, the Price Control Act of 1964 and the Merchandise Marks Act of 1941.

One of the most controversial aspects of the Act is that it introduces a system of product liability on suppliers if damage is caused by defective products.

Under the new act, consumers will have the right to sue producers and suppliers, as well as distributors, for any damage or injury, without the need to prove negligence.

Speaking about how insurance groups should start gearing for the Act which comes into effect next year, Amelia Costa of Deneys Reitz commercial law firm said: "They should begin now by reconsidering their insurance contracts and advising their insured's to word indemnity terms or disclaimers so that they are in line with the provisions of the Act."

"Insurers should consider widening the net of their policy wordings on product liability for extended liability exposure on their insured," she said.

Insurance groups have from now until October 2010 to make sure that their agreements are redrafted and that all their service and goods suppliers are properly insured.