Recent Solvency and Assessment Management (SAM) Regulations that are being proposed are the bone of contention in the Insurance Industry. Industry leaders argue that the financial regulations in South Africa are being imposed on companies too rapidly, despite South Africa’s financial regulations being one of the best in the world. However, South Africa’s Insurance market growth has reduced substantially and has reached a point of saturation. Insurers are analysing the international marketplace for growth opportunities in their business. Huge opportunities in Africa and in other emerging economies of the world have lured the Insurance companies to expand their operations beyond South Africa, at the expense of their operations in developed economies.
These expansions, especially in unstable emerging economies come at a huge cost and carries inherent risks in moving to these territories. Qualitative exploratory research techniques were used to understand the link between the regulations and expansion plans to ascertain what the former has effect on the latter. Sixteen senior managers from the industry were interviewed, their responses analysed and results aggregated in this report.
The results expressed that the effect of SAM on insurance companies is varied. Some companies endure the burden in terms of huge costs of implementation and operation and restrict their expansion plans; while large insurance companies with huge balance sheets see no impact on their plans. The research further includes the effect on insurance companies of other regulations such as nationalisation, sovereign rating downgrades and perceived skills gap in the market and proposed a model around these regulations.