South Africa Insurance Industry – Governance, Risk and Compliance

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South Africa Insurance Industry Regulation Overview

The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) act as the regulators of the South African insurance industry along with the International Association of Insurance Supervisors (IAIS), African Insurance Organization (AIO), and the South African Insurance Association (SAIA) act as the other supervisors. The South Africa insurance industry governance regulation report provides a detailed analysis of the insurance regulations for life, property, motor, liability, personal accident, and health, and marine, aviation, and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries. The report also gives insurers access to information on prevailing insurance regulations and recent and upcoming changes in the country’s regulatory framework, taxation, and legal system. It includes the scope of non-admitted insurance in the country as well.

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 ·       Aviation Liability Insurance

·       Marine Liability Insurance

·       Professional Indemnity Insurance

·       Social Security Insurance

·       Liability 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

Financial Sector Conduct Authority (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. Its key objectives include enhancing and supporting the efficiency and integrity of financial markets and assisting in maintaining financial stability. The FSCA also protects financial customers by promoting their fair treatment by financial institutions and providing them with financial education programs.

International Association of Insurance Supervisors (IAIS): The IAIS is a membership-driven global organization that represents 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.

Key Pieces of Legislation Governing the Industry are:

  • The Insurance Act 2017
  • Long-Term Insurance Act 1998
  • Short-Term Insurance Act 1998

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South Africa Insurance Industry - Compulsory Insurance

Some of the key compulsory insurance required within the South African insurance industry are:

  • Aviation Liability Insurance
  • Marine Liability Insurance
  • Professional Indemnity Insurance
  • Social Security Insurance
  • Liability Insurance

South Africa Insurance Industry Analysis by Compulsory Insurances

South Africa Insurance Industry Analysis by Compulsory Insurances

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South Africa Insurance Industry - Company Registration and Operation

The Insurance Act 2017 specifies that any person willing to conduct business related to financial services in South Africa needs to obtain a license before conducting such business in the country. Article 5 of the Insurance Act prohibits the operation of short- or long-term insurance businesses by any person unless they are licensed as short-term or long-term insurers. Reinsurers and intermediaries are required to obtain a license to operate in the country. The companies allowed to make an application for registration as an insurer include public companies and companies incorporated without a share capital.

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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: The South African Revenue Service administers taxation in South Africa. Corporate income tax applies to domestic companies on their worldwide income while 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

This report provides:

  • Details of the insurance regulatory framework in South Africa
  • Details of the rules and regulations governing insurance products and insurance entities
  • Lists and analysis of key trends and developments pertaining to the country’s insurance regulatory framework
  • Analysis of the rules and regulations pertaining to the establishment and operation of insurance businesses in the country
  • Details of the 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.
  • 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 African insurance industry.
  • Gain detailed information about the key regulations governing the country’s establishment and operation of insurance entities.
  • Understand key regulations and market practices pertaining to various types of insurance products.

Table of Contents

  • 1. SOUTH AFRICA

    • 1.1. Legislation Overview

      • 1.1.1. Supervision and Control
      • 1.1.2. Legislation

    • 1.2. Compulsory Insurance
    • 1.3. Non-Admitted Insurance Regulations
    • 1.4. Company Registration and Operation

      • 1.4.1. License
      • 1.4.2. Foreign Direct Investment / Ownership
      • 1.4.3. Minimum Capital Requirements
      • 1.4.4. Solvency Margins
      • 1.4.5. Reserve Requirements
      • 1.4.6. Statutory Return Requirements
      • 1.4.7. Fee Structure

    • 1.5. Taxation

      • 1.5.1. Tax on Insurance Premium
      • 1.5.2. Corporate Income Tax
      • 1.5.3. Corporate Capital Gains Tax
      • 1.5.4. Value Added Tax

    • 1.6. Legal System
    • 1.7. Policy Practice

  • 2. About GlobalData
  • 3. Contact Us

Table

South Africa – Maximum remuneration payable for binder functions

South Africa – Maximum cost of credit life insurance

South Africa – Corporate Tax Rates for the Financial Year 2023

South Africa – SASRIA Annual and Monthly Premium Rates

Commission Rates for Health Insurance Policy

Figures

List of Tables

South Africa – Corporate Tax Rates for the Financial Year 2021

Frequently asked questions

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