Insurance Act
Insurance Act
Provides the prudential regulation and supervision framework for insurers and Lloyd's underwriters in South Africa, implementing the Solvency Assessment and Management (SAM) regime.
Sections
3
Duties
3
Questions
4
Assessment from
R 75 000
What it covers
The Insurance Act 18 of 2017 consolidated and modernised the prudential regulation of South African insurers, replacing the prudential provisions previously split across the Long-term and Short-term Insurance Acts. It implements the Solvency Assessment and Management (SAM) framework — South Africa's equivalent of the EU's Solvency II regime — under the supervision of the Prudential Authority. The Act requires insurers to be licensed per specific classes and sub-classes of insurance business, to maintain a Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR) calculated using either the Standard Formula or an approved Internal Model, and to conduct an Own Risk and Solvency Assessment (ORSA) — a forward-looking, insurer-specific assessment of risk and capital adequacy that goes beyond the mechanical SCR calculation. Section 30 imposes fit and proper requirements on significant owners, directors, and key persons (head of actuarial function, head of compliance, head of internal audit, and other controlling functions), requiring PA approval before appointment. The Act also governs group supervision for insurance groups, requires a documented governance framework including a risk management system and an effective system of internal control, and gives the PA extensive powers of intervention including the ability to impose additional capital requirements, restrict business activities, or place an insurer under curatorship.
Does this apply to you?
It applies if
- Your organisation conducts long-term insurance business (life, disability, health, retirement annuity) or short-term insurance business (motor, property, liability, engineering) on its own account
- Your organisation is a Lloyd's underwriter or correspondent operating in South Africa
- Your organisation is a controlling company of a licensed insurer, subject to group supervision requirements
- Your organisation is a microinsurer operating under the lighter-touch microinsurance licensing framework introduced by the Act
Thresholds that change what's required
- Licensing classes and sub-classes determine the specific prudential requirements applicable — a life insurer's SCR calculation differs materially from a non-life insurer's
- Microinsurers face a simplified prudential regime with lower capital requirements, reflecting their smaller scale and simpler risk profile, but remain fully licensed and supervised entities
- Insurance groups face additional group-level capital adequacy and governance requirements under the group supervision framework
Exemptions
- Reinsurance arrangements between licensed insurers follow specific provisions distinct from primary insurance licensing
- Certain risk-pooling arrangements that do not constitute 'insurance business' as defined in the Act fall outside its scope — this determination should be made by qualified legal counsel given the broad statutory definition
What non-compliance costs
Maximum fine
R 10 000 000
Imprisonment
Up to 10 years for conducting insurance business without a licence or for providing false information to the Prudential Authority
Civil exposure
Policyholders may have claims for benefits due under policies; in cases of insurer insolvency arising from prudential failures, policyholder protection mechanisms and potential personal liability of directors for reckless trading may also arise
Reputational
PA enforcement actions including additional capital requirements, business restrictions, or curatorship are highly publicised; rating agency downgrades typically follow any public PA intervention, materially affecting new business volumes and reinsurance terms
What the assessment covers
The assessment works through 4 questions across 3 duties, scored out of 57. Each answer generates the specific actions needed to close or prove that duty — and a “yes” only counts once its evidence is in, which is what makes the score defensible rather than self-declared.
The questions themselves are part of the assessment.
Find out where you stand on Insurance Act
Run the assessment, get your score, and get the exact list of what to fix — with the evidence trail an auditor will ask for.