As 2026 approaches, one trend is already shaping up: South African policyholders and brokers are expected to access Lloyd’s specialist insurance faster and with fewer regulatory hurdles, while the market gains additional capacity for high-value and niche risks that local insurers have struggled to cover.
This shift is driven in part by the Financial Sector Conduct Authority’s INS Notice 3 of 2025, published on 25 April. The Notice granted an exemption to Lloyd’s open market correspondents (OMCs), allowing them to operate in South Africa without prior FSCA approval under section 8(2)(d) of the Short-term Insurance Act.
The exemption “has reshaped the landscape for high-capacity and specialist insurance in South Africa”, say Charl Williams, director: corporate and commercial law at Cliffe Dekker Hofmeyr, and associates Parusha Chetty and Tasneem Jacobs.
In an analysis, they added: “The impact and effect of the exemption will undoubtedly be influenced by the utilisation of the additional capacity made available to the South African market and Lloyd’s compliance with the Authority’s conditions.”
Understanding Lloyd’s open market correspondents
According to CDH, a Lloyd’s OMC is a person approved by Lloyd’s to introduce business to a Lloyd’s broker or underwriter for placement in the market on an open-market basis. These intermediaries can place business directly into Lloyd’s, usually from overseas territories. Unlike general intermediaries, they must be formally accredited by Lloyd’s and can only place risks with registered Lloyd’s brokers, not directly with syndicate underwriters.
OMCs act as a bridge between the London market and local stakeholders. CDH explains they “play an essential facilitative role in allowing policyholders to benefit from Lloyd’s specialist underwriting capacity, while maintaining regulatory integrity”.
How the exemption changes the landscape
Before the exemption, any person who wanted to act as an intermediary for short-term insurance in South Africa needed FSCA approval. With the April 2025 exemption, Lloyd’s OMCs can now operate without this step, subject to certain requirements.
CDH notes that although using Lloyd’s OMCs in South Africa is not new, the exemption has “significantly streamlined the process”. It facilitates efficient access to Lloyd’s capacity by removing a prior approval step specific to Lloyd’s OMCs, while maintaining regulatory protections.
This makes Lloyd’s products more accessible to South African stakeholders, particularly in sectors such as personal indemnity, mining, cybercrime, infrastructure, and marine trade. CDH adds that the reduction in “red tape” increases flexibility for policyholders, giving them easier access to Lloyd’s expertise and innovative solutions.
Who qualifies – and who does not
The exemption applies only to Lloyd’s OMCs. Other foreign intermediaries or brokers remain subject to FSCA approval requirements, and long-term insurance intermediaries are not included.
CDH highlights that the exemption is conditional. Lloyd’s must:
- Promptly inform the FSCA of any material changes to the circumstances underpinning the exemption;
- Maintain robust governance, control, and oversight to minimise risk of unfair outcomes to customers;
- Conduct due diligence before approving any OMC in South Africa, ensuring they are licensed under the FAIS Act and compliant with applicable legislation; and
- Report annually to the FSCA on the nature and value of business conducted by OMCs in South Africa.
Looking ahead
The exemption does not waive FAIS requirements such as key approvals, conflicts of interest, record keeping, or fit-and-proper standards. CDH emphasises that “the impact and effect of the exemption will undoubtedly be influenced by the utilisation of the additional capacity made available to the South African market and Lloyd’s compliance with the Authority’s conditions”.
A positive outcome, CDH suggests, could pave the way for extending the exemption or potentially including long-term insurance intermediaries in the future, offering South African policyholders and brokers broader access to Lloyd’s high-capacity and specialist insurance.
