Abstract:
The study investigates how regulatory changes infl uence the role of risk management in insurance companies, more specifi cally the impact which
Pillar II of Solvency Assessment and Management (SAM) may have on
risk management in a South African insurance company. Furthermore,
the study evaluates the current self-assessed readiness of insurers for
future SAM risk management requirements. A quantitative secondary
data analysis approach was applied to the SAM Pillar II Readiness Survey,
which the Financial Services Board conducted in 2012 as part of the
process to prepare insurance companies for SAM. The results of the
survey, which was mandatory for all registered South African insurance
companies (life and non-life insurers), indicated that four areas are
associated with insurers’ self-assessments in terms of readiness for
the SAM requirements: having a risk management system in place,
documenting the risk management strategy, having an explicit assetliability
management policy and having a risk transfer policy. Furthermore,
the results indicate a gap between effective risk management practices
as described in the literature and those which insurers associated with
being ready for the SAM requirements. Raising insurer awareness of
these gaps will help strengthen the local risk management system.
