• The governance and risk management framework (“GRMF”) for short and long-term Insurers (collectively, “Insurers”) gazetted under Board Notice 158 of 2014 will become effective on 1 April 2015.   
  • The GRMF is informed by the core principles of the International Association of Insurance Supervisors and is one of the interim measures under the Solvency Assessment and Management project which seeks to establish a risk-based supervisory regime for the prudential regulation of Insurers in South Africa.  
  • The GRMF has, amongst other things, the following consequence for the board of directors of Insurers:
    • it must, in addition to its responsibilities under the Companies Act, 2008, act in the best interests of policyholders;
    • it must contain a “lead independent director” who will provide leadership and advice to the board when the chairperson is absent or has a conflict of interest; and
    • it must contain an appropriate number and mix of individuals to ensure that there is an overall adequate spread and level of knowledge, skills and expertise at board level commensurate with the nature, scale and complexity of the business and risks of that Insurer.  
  • The GRMF also requires Insurers to establish and maintain, amongst others, the following policies:
    • a fit and proper policy to be applied to the directors, managing executives, public officer, auditor, statutory actuary (or his or her alternate), head of a control function or significant owners of an Insurer; and
    • a reinsurance and risk transfer policy that enables the Registrar of Insurers to understand the economic impact of reinsurance and other forms of risk transfer arrangements on a particular Insurer.  
  • The GRMF board notice may be accessed here.