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President Zuma Assents to Insurance Act

January 22, 2018

The Presidency

President Zuma has assented to the Insurance Act.

Parliament passed the bill in December 2017.

The bill was tabled in parliament in January 2016.

The act aims to put a legal framework in place for the prudential supervision of insurance businesses in South Africa that meets international standards for insurance regulation and supervision.

It also seeks to promote financial inclusion and financial transformation through the introduction of a micro-insurance regulatory framework.

The policy objectives of the act include:

• Enhancing access to insurance;
• Enhancing financial soundness; and
• Alignment with international standards.

The act seeks to:

• provide for a legal framework for the prudential regulation and supervision of insurance business in the Republic that is consistent with the Constitution of the Republic of South Africa, 1996, and promotes the maintenance of a fair, safe and stable insurance market;
• introduce a legal framework for micro-insurance to promote financial inclusion;
• replace certain parts of the Long-term Insurance Act, 1998, and the Short-term Insurance Act, 1998; and
• provide for matters connected therewith.

A new Solvency Assessment and Management regime will be introduced as well as a framework for insurance group supervision.

The act also aims to facilitate alignment with international standards in accordance with South Africa’s G20 commitments.

The act addresses regulatory gaps identified by the IMF/World Bank’s Financial Sector Assessment Program evaluation of South Africa.

During its deliberations, the standing committee on finance inserted a new definition on “financial sector code”.

Clause 30(4) was also amended to empower the Prudential Authority to prescribe governance principles and requirements in relation to the achievement and maintenance of stated commitments.

The act will come into effect on a date still to be determined by the finance minister.

The Draft Public Audit Amendment Bill has also been published in Government Gazette 41396 for comment.

The proposed legislation seeks to:

• amend the Public Audit Act, 2004, so as to insert new definitions;
• provide for certainty on the discretion of the Auditor-General with regard to certain audits;
• authorise the Auditor-General to provide audit or audit related services to an international association, body, institution or organisation;
• provide for the Auditor-General to refer undesirable audit outcomes, arising from an audit performed under the Act, to an appropriate body for investigation;
• provide for the Auditor-General to recover losses in certain instances against the responsible persons;
• provide for the establishment, powers and functions of a remuneration committee;
• provide for consultation between the Independent Commission for the Remuneration of Public Office-bearers and the remuneration committee;
• provide for additional reporting requirements;
• provide for a maximum amount or percentage of audit fees that can be defrayed from the vote of National Treasury;
• revise the provisions relating to the appointment of an audit committee for the Auditor-General;
• empower the Auditor-General to make regulations on specific issues;
• provide for matters connected therewith.

The standing committee on the auditor-general intends tabling the draft bill in parliament.

Comment is invited until 19 February 2018.