Key Person Appointments Under The Insurance Act

Section 14(1) of the Insurance Act, 2017 provides that the appointment of certain key persons “must be approved by the Prudential Authority and takes effect only if the Prudential Authority approves the appointment”. The applicable key persons include any director and the auditor of both the insurer and its licensed controlling company, as well as the individual audit engagement partner from the audit firm that takes responsibility for the audit.

Two recent decisions provide welcome guidance on the interpretation of this section, but do not address all practical issues that might arise. The decisions are the Financial Services Tribunal decision in Safire Insurance Company Limited v The Prudential Authority (Case No. PA2/2025, decided 23 March 2026) (“Safire Decision”) and the earlier High Court judgement in Prudential Authority of South Africa v Financial Services Tribunal and Others 2025 (3) SA 597 (GP) (the "Land Bank judgment").

Safire Decision

Safire's external audit firm rotated its audit engagement partner in accordance with the routine requirements prescribed by the Companies Act, 2008 (“Companies Act”). While both the audit firm and the initial audit partner were approved as key persons in terms of section 14 of the Insurance Act, approval for the replacement audit partner was sought by Safire and granted by the Prudential Authority (“PA”) some three years after the appointment was made. The Prudential Authority imposed an administrative penalty on Safire for contravention of section 14, which required both the audit firm and relevant partner to be approved by the PA as key persons.

The Tribunal set aside the PA’s finding of a contravention and the penalty. The following is noteworthy.

1. The Tribunal, relying on the Land Bank judgement held that section 14 of the Insurance Act does not, on its plain language, require that the PA's approval be obtained before the appointment of a key person is made. As the High Court stated in the Land Bank judgment:

"S14, on no interpretation, reads that there must be approval of directors by the PA before appointment. [The applicable prudential standard,] GOI 4 ascribes wording to s14 that simply does not exist and does not aid the PA. But, logically and practically, there cannot be approval before appointment.’ (own emphasis)

2. The Tribunal further noted that, unlike section 16 of the Insurance Act (which requires notification of termination of a key person to be made within 30 days thereof), the Legislature did not prescribe a time period within which approval must be sought under section 14, meaning that even a three-year lapse does not of itself constitute a contravention of this section.
3. Importantly, the Tribunal acknowledged a significant nuance arising from the fact that the PA did not, in Safire's case, grant retrospective approval (contrasting this with the facts in the Land Bank judgment) — Safire had requested it, but the approval was granted prospectively. The Tribunal reasoned that "approval is not a condition precedent to the making of the appointment; it is a condition for the appointment to take effect," and that in the absence of retrospective approval, the appointment of the replacement auditor "only took effect on approval by the PA". The Tribunal was candid about the regulatory gap this creates, echoing the High Court's acknowledgement that the only way to remedy this uncertainty was " by amending s14 via the Legislator".
4. Both the Safire Decision and the Land Bank judgement assumed that the PA indeed had the power to grant retrospective approvals under section 14.

Practical Implications

For insurers and their legal advisers, the combined effect of the Land Bank judgement and the Safire decision is that: (i) the PA cannot impose penalties under section 14 for appointments made without prior approval under section 14 and (ii) the PA may grant approval for an appointment of a key person with retrospective effect.

A question not addressed in the Safire Decision was the status of the actions performed by the key person in the period that elapsed since the appointment of the relevant key person and such appointment taking effect upon the approval by the PA.

Consider, for example, where a director is appointed and participates in decisions of the board of an insurer or its licensed controlling company without such appointment having taken effect until the subsequent approval by the PA. If nothing else, it is difficult to see how such participation could accord with the required effective governance framework for an insurer and a licensed controlling company prescribed by section 30 of the Insurance Act, especially if the relevant director was appointed to meet prescribed minimum requirements for the composition of the board of directors or the audit committee under the company’s memorandum of incorporation or the Companies Act.

If the appointment is not retroactively approved by the PA, then the validity of actions undertaken by such a key person during the period in which the appointment had, as a matter of law, not taken effect could be called into question.

In our view it therefore remains important, from a practical perspective, to obtain PA approval before a newly appointed director, auditor or audit partner takes any actions in such capacity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.