Business Day reports as follows:
A highly technical bill intended to strengthen the prudential regulation of the insurance industry was attacked by black business in Parliament on Tuesday for reinforcing the barriers to their entry into the sector.
The intervention by the Black Business Council and four black-owned insurance firms urging transformation of the white-dominated industry was supported by MPs across the political spectrum.
It added further momentum to the drive for “radical economic transformation”.
Representatives of the black-owned insurance firms complained that the licence conditions, high audit and actuarial fees, excessively demanding standards and a heavy regulatory burden served to exclude black players in the market. They dismissed the provisions for micro-insurance in the bill as merely creating a “playground” for blacks, while the main action took place in the established white-dominated sector of the industry.
Financial Services Board (FSB) deputy executive officer Jonathan Dixon said the FSB was open to including measures to facilitate transformation as long as this did not undermine policyholder protection. Finance committee chairman Yunus Carrim noted that transformation had to include both de-racialisation of ownership as well as protecting the most vulnerable policyholders.
Whilst it appears that the resistance in parliament was aimed at the prudential leg of Twin Peaks, it may very well follow that the proposed market conduct regulations will also be subject to close scrutiny. Apart from policyholder protection, financial inclusion is one of the major drivers of the retail distribution review. Restrictive requirements could prove to be a barrier to entry for people wanting to work in these markets, thereby exacerbating an existing problem.