South Africa's changing regulation: an opportunity for smaller players in the insurance industry
Date
2016
Authors
Mkhabela, Manqoba Bonginkosi
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Abstract
The South African insurance industry exists within the shifting paradigm of regulation. The global financial crisis in 2008 has fostered a worldwide need to reassess the financial regulatory environment. Financial stability, reduction of redundancies and the closing of loopholes, so as to avoid arbitrage, has since come under the spotlight. In keeping with the international principals and trends The South African National Treasury has tabled a series of legislation that will help close the gaps, ensure the prudential integrity of the insurance system and outline the fair treatment of customers involved.
Micro-insurance and funeral insurance present systems that are highly unregulated and therefore pose a threat to both the principals of prudential and market conduct oversight. Micro-insurance is also heralded as the saving grace (Morduch, 2002) in providing a vehicle to include the formerly excluded members of the society to the mainstream insurance market.
The paper explores the various operators that exist in the funeral insurance market and aims to answer whether an opportunity exists for them under the new regulatory paradigm. Perceptions of industry role players are presented in the findings of this paper. These perceptions were attained by interviewing the industry professionals that are privy to the compliance information and are well versed in the strategy of their company.
The findings in the paper show that the current system that exists is not conducive for informal operators. It further acknowledges that even though a great opportunity exists for informal insurers, because of their understanding of socio-economic factors of the low income sector, they do not see the opportunity that is presented to them. Furthermore there exists a place for these players to operate in the formal network, and their entrance will not cannibalise the existing insurance industry.
Description
Dissertation submitted in partial fulfilment of the requirements for the degree
Master of Management in Finance and Investments
at the Wits Business School, 2015
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Citation
Mkhabela, Manqoba Bonginkosi (2016) South Africa's changing regulation: an opportunity for smaller players in the insurance industry, University of the Witwatersrand, Johannesburg, <https://hdl.handle.net/10539/23880>