South Africa delayed the start of a new regulatory system for the nation’s insurers because of uncertainty about the implementation process and the ability of companies to comply.
The new regime, known as Solvency Assessment and Management, or SAM, will apply from January 2016, compared with a previous target of 2015, Ian Marshall, head of the SAM unit at South Africa’s Financial Services Board, said at an investor conference in Durban today.
“There is still a lot of uncertainty around development, which makes it very difficult to plan and to make decisions,” Marshall said. “There was also a question whether we are going to be able to implement the full regime” by 2015, he said.
SAM will require insurers to increase the amount of regulatory capital they hold and to implement new governance, risk management and reporting systems. It may add as much as 10 percent to insurers’ costs and raise premiums for customers, Ralph Mupita, chief executive officer for emerging markets at Old Mutual Plc (OML), South Africa’s biggest life insurer, said yesterday.
The introduction of a similar regime for Europe, known as Solvency II, has been delayed amid objections by German, French and British insurers over how much capital will be required to back long-term savings products.
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