Guardrisk awarded SA’s first microinsurance cell captive licence

19 April 2021

In an exciting development, which will provide the ideal vehicle to fast-track transformation in the insurance sector, Guardrisk has been granted SA’s first microinsurance cell captive licence by the Financial Sector Prudential Authority.

In contrast to traditional, separate life and non-life insurance licences, Guardrisk’s microinsurance licence is a composite insurance licence that allows life and non-life insurance products to be written out of the same licence and cell. The guiding principle behind microinsurance is to offer no-frills, yet 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 R1 million and with cells in a microinsurance cell captive licence it reduces even further to R250 000,” says Herman Schoeman, CEO of Guardrisk. This means that 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.

“Microinsurance cell owners will also get assistance with risk spreading through access to reinsurance markets, insurance expertise – including compliance and governance in a highly regulated environment – and most importantly, skills will be transferred. Thus, the cell captive becomes an incubator for full black ownership and upskilling,” says Xolani Nxanga, executive for market development at Guardrisk.

An example of an ideal candidate for a microinsurance cell captive would be a funeral parlour that wants to create a more sophisticated product, formalise its business, and reach more customers, with more products. For instance, today the business may just be selling a funeral plan but, with a microinsurance cell captive, the same business could also be selling a household insurance product to its customers. Thus, increasing their penetration into their loyal client base, and strengthening their business, brand and bottom line, with new and innovative products.

“It is important to stress that the microinsurance cell captive licence complements our existing life and non-life cell captive businesses. It is particularly suitable to insurance products that provide cover within the specified limits: R300 000 for non-life insurance and R100 000 for life insurance. The microinsurance cell captive is suitable for a large range and variety of businesses; from a large retailer or fintech company selling customised insurance products, to a new entrepreneur entering the industry,” says Nxanga.

Through its microinsurance licence, Guardrisk is now in a position to sell individual life, group life, credit life and funeral insurance; as well as products that provide cover for motor, property, legal expenses, and accident and health.