BRICS Opportunities for South African Emergence in the Reinsurance Industry: Challenges and Prospects

Abstract

Insurance and investment companies usually write out policies that cover potential losses for customers.1 In essence, reinsurance is the management of the risk of insurance companies and investment brokers. The notion of reinsurance has been lacking in both philosophy and methodologies.2 This article assesses the challenges of reinsurance in Africa in relation to South Africa, opportunities presented by the BRICS, an institutional model, and an impact assessment framework for creating both harmony and effectiveness in the reinsurance industry in South Africa. The risk management theory is utilised to give understanding to reinsurance globally. Data is collected by interview, a systematic literature review, and key word-in-search model for data collection. Data collected is analysed using a combination of theme analysis, triangulation and content analysis. Findings include poor performance in the reinsurance industry due to fragile market and ranking, challenges relating to the reimbursement of premium, financial vivacity of the reinsurance companies, limited underwriting capacity of reinsurers, and the lack of a framework. It recommends two frameworks for rejuvenating the reinsurance industry: South Africa’s institutional structure for reinsurance, and the impact and outcomes forum for an effective reinsurance industry for rapid development of the industry.