SA Insurance Industry to Adopt International Standards

December 14 - A new regulations model has been introduced to the South African insurance market, based on European solvency regulations known as Solvency II.

The local version will essentially bring South Africa's short term insurance industry in line with international standards and bring peace of mind to policyholders.

Under the new regulations, insurance companies will need to determine their insurance risk and disclose them.

Naturally, companies will want to aim for low risk profiles so that investors and consumers are attracted to them.

Policyholders will thus be better protected if insurance groups are obliged to improve on their risk management standards.

"These new solvency regulations will result in more conscious protection of the balance sheet in favour of the insured," explained the Chief Executive Officer of Lion of Africa Insurance, Adam Samie.

Samie pointed out that while the South African insurance industry withstood the recession well, it has to be remembered that we are part of larger, global industry.

"It can't be ignored that short term insurance is a global business, particularly for smaller companies that are required to do reinsurance with global companies," he said.

While consumers could feel the pinch of implementing the new framework in the short term, the benefits to the cost of their policies will felt in the long run.

As an example, Samie said: "There can't be dramatic variations in the costing of risk, since accuracy and transparency will be paramount."