We have come a long way since the first SAM roadmap was circulated to the industry in 2010. It is now official, eight years on, SAM is effective from 1 July 2018.
Most of the industry queries, concerns, discrepancies and impracticalities of the SAM regime that were uncovered from 2010 have been dealt with amongst the various working groups and committees set up by the Prudential Authority (PA), formerly known as the Financial Services Board (FSB).
The regulatory changes required a new Insurance Act along with a new set of regulations and guidance notes for the various industry players. In laying down the new regulations, the PA recently changed the requirements for reinsurers to be locally incorporated companies to having the option to register as a foreign branch in South Africa.
The intention behind this was to level the playing field between the various reinsurers and to increase competition in the industry. There are benefits to entering the market as a branch but as we start to dig deeper into this new option we found that there are also some unanswered questions as to the practicalities and implications around this alternative route to operating in the South African reinsurance market.