South Africa Insurance Industry – Governance, Risk and Compliance

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South Africa Insurance Industry Regulation Overview

Twin Peaks Model is a new financial regulatory system that governs the insurance industry in South Africa. It is a comprehensive and complete model for regulating the financial sector in South Africa. Furthermore, the PA was established under the Reserve Bank of South Africa under the FSR Act 2017. It does not function as a public agency and is the prudential regulator responsible for the general administration, safety, and soundness of all financial institutions including insurers operating in South Africa.

The South Africa insurance industry governance regulation research report provides a detailed analysis of the regulations for several insurance types including life, property, motor, and liability. The report also gives insights into recent and upcoming changes in non-admitted insurance regulations, taxation, and the legal system. Also, leverage our elaborate procedural review of new company registrations and operations based on key parameters such as license, FDI, minimum capital requirements, and solvency to better understand market avenues.

Key Regulators ·        Financial Sector Conduct Authority (FSCA)

·        Prudential Authority (PA)

·        International Association of Insurance Supervisors (IAIS)

·        African Insurance Organization (AIO)

·        South African Insurance Association (SAIA)

Compulsory Insurances ·        Motor Third-Party Liability Insurance

·        Aviation Liability Insurance

·        Marine Liability Insurance

·        Professional Indemnity Insurance

·        Social Security Insurance

Key Taxes ·        Tax on Insurance Premium

·        Corporate Income Tax

·        Corporate Capital Gains Tax

·        Value Added Tax

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South Africa Insurance Industry – Key Regulators and Legislation

FSCA: The FSCA established under the FSR Act 2017 functions as a public agency and is responsible for the management of business conduct and consumer protection. Enhancing and supporting the efficiency and integrity of financial markets is one of the key objectives of the regulator.

International Association of Insurance Supervisors (IAIS): The IAIS is a membership-driven global organization representing insurance regulators and supervisors. It formulates and issues various global insurance principles, standards, and guidance, provides training and support on issues related to insurance supervision and organizes meetings and seminars for insurance supervisors. The IAIS works closely with other financial sector standard-setting bodies and international organizations to promote financial stability.

A few of the laws regulating the South African insurance industry are:

  • Banks Act 94 of 1990
  • Financial Markets Act 19 of 2012
  • Co-operative Banks Act 40 of 2007
  • Mutual Banks Act 124 of 1993
  • Corporation for Public Deposits Act 46 of 1984

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South Africa Insurance Industry - Compulsory Insurance

A few of the compulsory insurances required within the South African insurance industry are:

  • Motor Third-Party Liability Insurance
  • Aviation Liability Insurance
  • Marine Liability Insurance
  • Professional Indemnity Insurance
  • Social Security Insurance

Compulsory Insurance in South Africa

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South Africa Insurance Industry - Company Registration and Operation

In South Africa, the Insurance Act 2017 specifies that any person willing to conduct business related to financial services needs to obtain a license before conducting such business in the country. Meanwhile, Article 5 of the Insurance Act 2017 prohibits the operation of short- or long-term insurance businesses in South Africa by any person unless they are licensed as short-term or long-term insurers and are authorized to operate short- or long-term insurance businesses respectively.

Reinsurers are required to obtain a license to operate in the country. Additionally, Article 5 of the Insurance Act 2017 stipulates that an intermediary must be licensed to conduct insurance business in the country.

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South Africa Insurance Industry – Taxation

Tax is imposed upon insurance premiums within the insurance industry in South Africa. The other taxes imposed are corporate income tax, corporate capital gains tax, and value-added tax.

Corporate Income Tax: In South Africa, corporate income tax applies to domestic companies on their worldwide income. However, for foreign companies, the tax is charged on the income earned in South Africa and on the capital gains from the disposal of immovable property and assets of a permanent establishment in South Africa. The income earned through foreign sources by domestic companies is subject to tax in the same way as the income earned in South Africa. Branch offices are subjected to tax in the same way as company subsidiaries.

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Scope

  • The report covers details of the insurance regulatory framework in South Africa.
  • The report contains details of the rules and regulations governing insurance products and insurance entities.
  • The report lists and analyzes key trends and developments in the country’s insurance regulatory framework.
  • The report analyzes the rules and regulations about the establishment and operation of insurance businesses in the country.
  • The report provides details of taxation imposed on insurance products and insurance companies.

 

Key Highlights

  • The PA and FSCA regulate the South African insurance industry.
  • The placement of non-admitted insurance is permitted only with approval from the FSCA, provided no domestic insurer is providing such insurance at equitable terms.
  • 100% FDI is permitted in the South African insurance industry.
  • The key classes of compulsory insurance include third-party liability insurance for commercial flight operators, workers’ compensation, insurance against oil pollution for tankers over 2,000 tons, clinical trials liability insurance for injury and damage, and environmental liability insurance.
  • Composite insurance is prohibited in South Africa. However, composite reinsurance is permitted.

Reasons to Buy

  • Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
  • Gain insights into the insurance regulatory framework in South Africa.
  • Track the latest regulatory changes and expected changes impacting the South Africa insurance industry.
  • Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
  • Understand key regulations and market practices about various types of insurance products.

Table of Contents

South Africa

Legislation Overview

Supervision and Control

Legislation

Compulsory Insurance

Non-Admitted Insurance Regulations

Company Registration and Operation

License

Foreign Direct Investment / Ownership

Minimum Capital Requirements

Solvency Margins

Reserve Requirements

Statutory Return Requirements

Fee Structure

Taxation

Tax on Insurance Premium

Corporate Income Tax

Corporate Capital Gains Tax

Value Added Tax

Legal System

Policy Practice

About GlobalData

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Table

South Africa – Corporate Tax Rates for the Financial Year 2024

Figures

List of Tables

South Africa – Corporate Tax Rates for the Financial Year 2021

Frequently asked questions

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