The provision of funeral cover is, if informal provision is included, both one of the most widely used financial services in South Africa and one of the most neglected. Recently, concern has grown about possible abuses in the provision of funeral cover, with several submissions made to the Parliamentary Committee on Finance in December 2003 suggesting wide scale abuse and fraudulent practices in the sector.

This document draws on a broader study on microinsurance intermediation and its regulatory challenges in South Africa that was conducted for the FinMark Trust2 and takes the first steps to extend intermediation typologies beyond MFIs and compulsory sales.

This is the report of the South African country study on the impact of regulation on the development of the micro-insurance market. As such it forms part of a larger cross-country study which considers the micro-insurance experience in Colombia, India, the Philippines, South Africa and Uganda with a view to develop a set of guidelines that can assist developing countries to establish a facilitative regulatory environment for micro-insurance. The report describes the regulatory landscape in South Africa as it impacts on the delivery of micro insurance.

Access to insurance may be an important strategy for reducing poverty. Financial markets, and particularly insurance services, can help poor people manage critical risks such as death in the family, illness, or loss of income or property. Despite the growing importance and expansion of microinsurance services geared to low-income people, microinsurance penetration remains limited, leaving the vast majority of poor people without adequate protection.