South African solvency regulation delayed
Following in the footsteps of its European counterpart Solvency II, the South African Solvency Assessment and Management (SAM) regime for insurers has been delayed. According to A.M. Best, widespread reports indicate that the new requirements will be introduced in January 2016, a year delay that brings the implementation in line with expectations for Solvency II.
According to the rating agency, the framework was created during a period of greater economic stability and it is likely that several South African insurers would be unable to comply if SAM were implemented in the current environment. However, the rating agency says: “it is imperative that the new risk-based framework is rolled out in the next few years.” According to A.M. Best: “despite its challenges, A.M. Best considers the introduction of the SAM framework to be a positive move. It is important that an insurance market on the scale of South Africa adopts a new risk-based regime.”
The delay is good news for captive insurers, who were found to be the least prepared for SAM’s implementation, partially due to the uncertainty that remains as to the treatment of captives under Solvency II and the extent to which the sector will be subject to proportionality.