New landscape means new laws
In South Africa, promotion of financial inclusion has been enshrined as a key objective of the new financial services legislation currently being implemented. The Prudential Authority and Financial Institutions Sector Conduct Authority are duty bound to ensure that all persons have timely and fair access to appropriate, fair and affordable financial products and services and to this end are overseeing the introduction of a new microinsurance regulatory framework.
STANDARDISED REQUIREMENTS PROMOTE ESTABLISHMENT BUT MAY LIMIT INNOVATION As noted previously, there is no standard “dictionary” definition of inclusive insurance. However, many countries have specific microinsurance legislation whichmay forma starting point for decision-making regarding the development of inclusive products. These have consumer protection at heart and will take into account the low financial literacy levels of many consumers. According to theAccess to Insurance Initiative (A2ii), over 20 countries have a specific microinsurance regulatory framework and at least the same number are in the process of developing one. 21 Depending on the jurisdiction, products falling within the microinsurance bracket may have wider customer disclosure obligations. Local laws may impose less stringent capital requirements for insurers offering products classed as microinsurance.
- Ernie Van Der Vyver, Partner, Clyde & Co, Johannesburg
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