Discussion paper on Reinsurance

The FSB recently published a document on the proposed future regulatory framework for reinsurance in South Africa.

This document –

  • Outlines the results of the reinsurance regulatory review carried out by the Financial Services Board;
  • Sets out the challenges inherent in the current regulatory framework relating to reinsurance;
  • Puts forward a number of proposed reforms aimed at mitigating these challenges and
  • Invites feedback from industry regarding the above.

Key proposed reforms relate to:

  • Participation in the reinsurance market.
  • Conducting reinsurance business.
  • Governance, Capital adequacy and Reporting.
  • Adjusting the credit rating of a reinsurer for solvency assessment of direct insurers so as to:
    • Create a level playing field for locally-incorporated reinsurers by adjusting for the sovereign cap on their credit ratings; and
    • Adjust the measure used to assess the risks arising from reinsurance arrangements entered into with foreign (re)insurers to capture a supervisory assessment of the prudential risks and externalities, depending on whether the business is conducted through a branch operation or on a cross-border basis.
  • Reinsurance contracts.
  • Transparency and accessibility of information.
  • IFRS & Tax.

Please click here to download the discussion paper.

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