Insurance 101 – What you need to Know about the Insurer
What is insurance?
Insurance is a means of protection from financial loss. It’s essentially a form of risk management. An insurer is an entity which provides insurance. The amount of money charged by the insurer to the insured for the coverage set in the insurance policy is called the “premium”.
In South Africa:
The insurance industry in South Africa is highly regulated.
The short term insurance industry is regulated by the Financial Services Board (FSB) under the Short Term Insurance Act 1998, while the long term insurance industry is regulated under the Long Term Insurance Act.
The Financial Services Board regulates the insurance industry and ensures that financial services providers have sufficient knowledge and are fully capable of dispensing advice.
In South Africa, an insurer must be licensed to operate.
An insurer must also be a registered South African public company. The insurance company may be a wholly-owned subsidiary of a foreign company.
Before you become an insurer you should know how to evaluate risks.
What are the minimum capital requirements to become an insurer in South Africa?
To be a long term insurer in the country, R10 million is required, while the short term industry requires a capital injection of R5 million.
How to find the best insurer:
Look for an insurer with a low overturn rate. This rate indicates the comparison of the number of complaints against the company to the amount overturned by the ombudsman.
Make sure that the insurer is registered with the relevant bodies.
The insurer should be in good financial standing; so that you can be assured that your claim will be covered efficiently in the event of an accident or weather disaster.
Good customer service is likely to be an indicator of the type of service you can expect should you have to claim.