Guardrisk chief executive Herman Schoeman. Photo: LinkedIn
Guardrisk chief executive Herman Schoeman. Photo: LinkedIn

Guardrisk granted SA’s first microinsurance cell captive licence

By Edward West Time of article published Apr 20, 2021

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CAPE TOWN - GUARDRISK has been granted South Africa’s first microinsurance cell captive licence by the Financial Sector Prudential Authority, a development it said could provide a vehicle to fast-track transformation in the insurance sector.

In contrast to traditional, separate licences for life and non-life insurance products, Guardrisk’s microinsurance licence was a composite licence that allowed life and non-life insurance products to be written out of the same licence and cell.

The guiding principle behind microinsurance was to offer no-frills, innovative insurance products in dedicated segments and markets.

“Traditionally, the most significant barrier to entry in the insurance industry has been the minimum capital requirement of R15 million, as well as the significant cost involved in running and managing an insurance company. For life and non-life cell captives, the required capital is reduced to R1m, and with cells in a microinsurance cell captive licence, it reduces even further to R250 000,” said Guardrisk chief executive Herman Schoeman.

“This means entrepreneurs now have access to the benefits of owning, controlling and managing their own insurance facility, under the guidance of the cell captive insurer, with the economic benefits of the insurance business in the cell flowing directly to the cell owner. This while providing consumers with access to custom-designed insurance products that offer value for money, backed by a registered and financially sound insurer,” he said.

Microinsurance cell owners would also receive assistance with risk spreading through access to reinsurance markets, insurance expertise – including compliance and governance in a highly regulated environment – and skills would be transferred.

“The cell captive becomes an incubator for full black ownership and upskilling,” said Guardrisk executive for market development Xolani Nxanga.

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