South Africa’s insurance industry is a fast growing one with many industry players involved. It’s therefore not surprising that the President of the Republic of South Africa recently signed the insurance bill into law. Here is what you need to know about this law referred to as Insurance Act, 2017.
The new law is designed to establish a legal framework for the prudential regulation and supervision of insurers and insurance groups and to facilitate the monitoring and the preservation of the safety and soundness of insurers.
A new prudential framework for the insurance sector called the Solvency Assessment and Management (Sam) framework has been developed to improve policyholder protection and contribute to financial stability through aligning insurers’ regulatory capital requirements with the underlying risks.
3. This law seeks to ensure that the poor are protected from the outcomes arising from market failures. This will be achieved by ensuring insurers are able to meet their long- and short-term promises to consumers and must remain financially stable, in order to be in a position to continue to pay claims.
4. The new law will help Parliament to conduct its oversight over the insurance sector to ensure that it is aligned with international standards, is inclusive, stable and lives up to higher prudential standards.
5.The legislation aims to bring about a fair, safe and stable insurance market and make it more accessible for new entrants such as micro-insurers.
6. Through this legislation, more providers of financial services will be brought into the regulatory net.
In a nutshell, this is what the new insurance legislation is all about. The date of commencement of the Insurance Act, 2017 is yet to be proclaimed.