For most of the past five years, the South African Insurance Industry has been pre-occupied with the race towards a new regulatory framework conceptualised to make insurance regulation, supervision and business conduct principles-based and risk-focused, similar to Solvency II in Europe. At the end of this process, South Africa aims to become a third-country equivalent jurisdiction under Solvency II with all the advantages of South African companies being able to operate in Europe.
The process has been undertaken in two main phases, with each phase comprising several sub-phases and key activities, just as the new framework has been built on three key pillars – namely, Pillar I (capital requirements), Pillar II (governance and risk management requirements) and Pillar III (reporting and disclosure requirements). The first phase of SAM (Solvency Assessment and Management) was the Development Phase. The second is the Implementation Phase. This started in 2011 with the design and prescription of interim measures on the valuation of assets and technical provisions as well as the calculation of capital requirements for short-term insurers and reinsurers.