The Future of Robo-Advisors in the South African Insurance Industry: Is the South African Regulatory Framework Ready?

Author: Samantha Huneberg

ISSN: 1996-2185
Affiliations: Lecturer in Mercantile Law, University of Johannesburg
Source: South African Mercantile Law Journal, Volume 32 Issue 2, 2020, p. 175 – 204


Insurance industries worldwide currently face disruption in many forms. Technology and artificial intelligence are changing the way we know and transact insurance. One way that technology is impacting insurance is through the use of robo-advisors. Robo-advisors provide automated advice to customers based on algorithms built into the software. This means that many people can now access insurance products at the click of a button. The previous dominant role of intermediaries and advisors in the insurance industry are not as significant in the procuring of insurance products as they used to be. Robo-advisors are able to provide on-demand advice at a lower price and with greater efficacy than their human counterpart. Many industry professionals welcome this change but there is a fear that the technology may render humans obsolete. The current regulatory framework in South Africa is relatively open to the use of automated advice and the future regulations appear to be pro-technology and innovation. This should allow for substantial growth in the insurance industry. Robo-advising should, therefore, play a more active role in procuring insurance products and maintaining these products. In terms of the current regulatory framework in South African insurance law, the question arises as to whether the regulatory framework accommodates the use of robo-advisors.