On 10 June 2020, the Prudential Authority published Communication 1 of 2020, wherein the Prudential Authority has stated it is imposing a temporary moratorium on the issuance of new licenses for a period of 6 months, unless there are exceptional circumstances as may be determined by the Prudential Authority.
Having regard to the COVID-19 pandemic, the Prudential Authority has determined that the temporary suspension is necessary due to additional challenges that the current economic environment would inevitably pose for new entrants.
The temporary suspension however will not apply to:
- the licensing of controlling companies of insurance groups as contemplated in terms of section 10(3) of the Insurance Act, 2017;
- the variation of existing licence conditions as contemplated in terms of section 26 of the Insurance Act, 2017; and
- the conversion of previously registered insurers as contemplated in terms of Item 6 of Schedule 3 to the Insurance Act, 2017.
The approach of the Prudential Authority to suspend new license applications aligns with the approach taken by the Australian Prudential Regulation Authority (APRA), which as early as 8 April 2020 equally imposed a moratorium of new license applications.
The Prudential Authority has undertaken to monitor global and domestic economic developments for the duration of the suspension period and review the suspension should it become necessary.
In the event that you require further information regarding new insurance license applications and the impact of this moratorium thereon, please contact Ernie van der Vyver or Nicole Britton.
A copy of the Prudential Authority's communication can be accessed here
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