The South African National Treasury has released a discussion paper setting out proposals for a new regulatory framework for companies offering insurance products to low-income earners. The proposals relate to the provision of micro-insurance which is any insurance product targeted at, or accessible to, low-income households.
The proposals should make it easier for insurers to service this market with most focusing on reducing regulatory costs. The recommendations include a dedicated micro-insurance license which would also be available to regular insurance providers wishing to enter this market in addition to their normal books of business.
Although it would be possible to implement these proposals through existing South African legislation, it is suggested that micro-insurance specific legislation be introduced for the sake of simplicity.
The Government is searching for a balance between market development and consumer protection in attempting to achieve its stated objectives and asks for public comments by 31 July 2008. A response document containing more detailed design features is scheduled for late 2008. Draft legislation and regulations are scheduled for release in 2009 and it is proposed that the micro-insurance structure be introduced during the course of 2010.
Click here to view a copy of the discussion paper (The Future of Micro-Insurance Regulation in South Africa).
