SA Insurance Groups Preparing for New Regulatory Regime

February 18 - A new set of regulatory requirements which will bring South Africa's long and short term insurance industries in line with international standards, needs to be implemented in the country by January 2014.

But while work towards the implementation of the Solvency Assessment and Management (SAM) regime is underway by many groups, including Mutual & Federal Insurance, the industry admits that there is still much work to do.

The General Manager of Products and Reinsurance at Mutual & Federal, Edward Paul said that his group is progressing well in terms of preparation for SAM, and the company is already benefitting from this groundwork.

"One of the major benefits of our preparatory work has been the enhancement and formalisation of our risk management framework, resulting in significantly better insight into our risk exposure," he said.

He added that better understanding of the risks written by Mutual & Federal gives greater insight into the group's product mix.

"We have a clearer understanding of which products are capital hungry or capital efficient, as well as our risks of preference - those we want to avoid, and those we want to attract," said Paul. "We also know which products should be written in combination for more direct benefit."

The SAM regime is based on Europe's regulatory requirements for its own insurance industry, which follow the principles of the Solvency II directive.

The regime is based on three pillars, namely quantitative, qualitative and reporting/disclosure.

"SAM is not merely about compliance, but focuses on making a real difference in day to day operations," added Edward Paul.