The Insurance Act was signed into law in January 2018 and came into effect on 1 July 2018.

It adopts a principle- and risk-based framework and is supported by prudential standards that elaborate on the principles enshrined in the Act. The PA published 42 prudential standards, which came into effect on 1 July 2018, to cover the financial soundness, governance and operations of the five types of insurance entities operating in South Africa (i.e. the solo insurers, Lloyd’s South Africa, micro-insurers, branches of foreign reinsurers and insurance groups).

The PA augmented the implementation of the Insurance Act with various communiqués covering topics such as the conversion of registration, the designation of insurance groups, auditing and disclosure requirements and transitional reporting obligations in terms of Schedule 3 of the Insurance Act. A number of joint communications were also published by the PA and the Financial Sector Conduct Authority covering topics such as the status of the instruments issued under the Long-term Insurance Act 52 of 1998 and the Short-term Insurance Act 53 of 1998, and cell captive insurance arrangements.

A specific activity under this new regime is the conversion of insurance licences.

An insurer is a person that is licensed to conduct the insurance business under the Insurance Act and includes Lloyd’s, a Lloyd’s underwriter and a reinsurer. Insurance business means life or non-life insurance business conducted or regarded as being conducted in the Republic, as well as reinsurance business.

Licensing in respect of the Insurance Act is prescribed by section 23 and is applicable to:

• insurers;
• reinsurers;
• controlling companies of insurers (i.e. groups) and reinsurers;
• micro-insurers; and
• branches of foreign reinsurers.

To qualify for licensing as an insurer conducting micro-insurance business, the applicant must be registered as a profit or non-profit company per the Companies Act or a co-operative registered per the Co-operatives Act.  
Where the application is for a reinsurance business, the applicant must be registered as a public or state-owned company under the Companies Act, a co-operative registered per the Co-operatives Act or a branch of a foreign reinsurer. 
For any other insurance business application, the applicant must be a public or state-owned company registered under the Companies Act or a co-operative registered per the Co-operatives Act.

Microinsurers licensing application

Licensing application form - new license application

Appliations for license as a controlling company of an insurance group