Managing agents wanting to set up a service company in South Africa must be aware of the following considerations and requirements that make up the local environment.
Key considerations
Financial considerations
- Service companies must set up a Citibank account to comply with local premium regulations. This account is opened by the local office, and the process takes approximately 10 working days to complete once the local office receives the signed LSW1073b as part of the binding agreement.
- All service companies are required to submit a monthly VAT return on behalf of underwriters by the 21st of each month.
Operational considerations
- SASRIA (South African Special Risks Insurance Association) is a state-owned insurer offering special risk cover in South Africa for individuals and businesses against losses or damages caused by politically motivated malicious acts, riots, strikes, terrorism, and public disorder.
- Where SASRIA cover is required, the service company will be onboarded to the bespoke Lloyd’s SASRIA system, SAPEC. Training will be provided by the Lloyd’s South Africa team.
Employee considerations
- Any service company employees providing advice to policyholders must be accredited in terms of the Financial Advisory and Intermediary Services (FAIS) Act. This Act regulates financial service providers, their employees, and licences.
- Accreditation applications must be made through the Financial Sector Conduct Authority (FSCA).
Regulatory considerations
- Lloyd’s is required to provide the FSCA with a summary of all open market business placed at Lloyd’s by the 1st of July for the preceding year. To facilitate this, service companies must submit their total GWP per line of business to Lloyd’s by the 15th of February.
- The FAIS Act outlines reporting requirements that must be met by intermediary service providers.
Launch Crystal+Local Requirements
- Service companies performing intermediary activities beyond providing advice must obtain a Financial Services Provider (FSP) licence from the FSCA.
- Local company requirements (tax obligations, compliance with the Companies Act, employment requirements, etc.) should be determined in consultation with a local attorney.
Lloyd’s registration process
Initiation
Co-ordinate with Lloyd’s teams to understand country interest, define service company and set timelines.
Register and setup
Managing agents will submit business plans and work with country managers for regional setup according to local regulations. In tandem the service company is registered on Atlas to complete necessary business and company details.
Due diligence
Managing agent’s maturity rating under PBO Principles is used to determine whether an Attestation or Decision Paper is completed, demonstrating satisfactory due diligence has been conducted.
Service Company Underwriting Agreement
Once all registration and set up requirements are met, formal service company underwriting agreement can be signed and service company can start trading on agreed date.
Additional information
Proximity
Setting up in South Africa enhances broker and client engagement through faster communication and stronger local relationships
Broker Support
Local brokers (Open Market Correspondents (OMCs)) are highly supportive of Lloyd’s, and having a local presence enables them to access Lloyd’s capacity locally.