South Africa’s motor insurance market is entering a more demanding phase of conduct regulation. The Financial Sector Conduct Authority (FSCA) has spent the past few years shifting the industry away from rule‑checking and towards outcomes-based supervision. As the latest conduct standards and supervisory expectations take full effect heading into 2026, both insurers and drivers are feeling the impact. The focus is no longer just on whether policies exist, but on whether customers are treated fairly at every stage of the insurance lifecycle.
This article explains what the FSCA’s latest conduct standards mean in practice, how they affect motor insurers and intermediaries, and what everyday drivers should do to stay protected and compliant.
Why the FSCA is tightening conduct standards
The FSCA’s mandate is consumer protection and market integrity. In motor insurance, complaints data has consistently pointed to issues such as unclear policy wording, unexpected exclusions, rejected claims, aggressive premium increases, and poor post-sale service. The regulator’s response has been to strengthen conduct standards that prioritise fairness, transparency, and value for money.
Rather than prescribing rigid rules, the FSCA now expects insurers to demonstrate that their products, pricing, advice, and claims processes deliver fair outcomes. By 2026, firms that cannot evidence these outcomes face stronger supervisory action, including penalties, licence conditions, or enforced remediation.
What has changed in the latest conduct standards
The most significant shift is the move to an outcomes-based approach aligned with the Treating Customers Fairly framework and the broader Conduct of Financial Institutions (COFI) reforms. Insurers must show that customers understand what they are buying, that products meet real needs, and that claims are handled efficiently and fairly.
There is also a sharper focus on the full product lifecycle. This includes how motor policies are designed, marketed, sold, administered, renewed, and cancelled. The FSCA expects insurers to identify conduct risks at each stage and to actively manage them rather than react after complaints arise.
Another key development is increased scrutiny of data use, especially where telematics, tracking devices, and behavioural pricing models are involved. Insurers must ensure that data-driven decisions are fair, explainable, and compliant with privacy laws.
What motor insurers must do differently in 2026
For motor insurers, compliance is no longer a compliance department exercise. It requires operational and cultural change across the business.
Product design must start with a clearly defined target market. Insurers need to show that a motor policy is suitable for the type of driver it is marketed to, whether that is private motorists, ride-hailing drivers, or commercial fleets. Selling a complex or restrictive policy to a customer who is unlikely to benefit from it is now a conduct risk.
Disclosure standards have also tightened. Policy documents, excess structures, exclusions, and premium adjustment mechanisms must be communicated in plain language. Important information cannot be hidden in fine print or buried in lengthy schedules. Insurers are expected to test customer understanding and improve communication where confusion is likely.
Claims handling remains one of the FSCA’s biggest focus areas. Insurers must assess claims promptly, communicate clearly, and provide reasons for decisions that customers can understand. Unreasonable delays, poor service, or blanket claim rejections based on technicalities attract regulatory attention. By 2026, insurers are expected to use complaints and claims data to identify systemic issues and fix them proactively.
Pricing and value for money are also under the microscope. While risk-based pricing is allowed, insurers must be able to justify premium increases and demonstrate that long-standing customers are not unfairly penalised. The FSCA expects insurers to monitor outcomes for vulnerable customers, including low-income drivers who may struggle with affordability or understanding complex cover.
The role of intermediaries and brokers
Intermediaries remain a critical part of South Africa’s motor insurance market, and the FSCA holds them to the same conduct standards as insurers. Brokers must ensure that advice is appropriate, that conflicts of interest are managed, and that customers understand the product they are buying.
By 2026, intermediaries are expected to document advice more thoroughly and to keep clear records of why a specific motor policy was recommended. Simply offering the cheapest option without considering the customer’s needs and risk profile can lead to conduct breaches.
Ongoing service is another area of focus. Brokers must support clients throughout the policy term, not only at inception. This includes helping with policy changes, explaining renewals, and assisting with claims. Poor post-sale service is increasingly viewed as a conduct failure rather than a customer service issue.
What drivers and policyholders must do
While conduct standards mainly target financial institutions, drivers also have responsibilities. One of the most important is disclosure. Policyholders must provide accurate and complete information when applying for insurance, including details about vehicle use, drivers, modifications, and previous claims. Misrepresentation, even if unintentional, can lead to claim disputes.
Drivers should also take greater responsibility for understanding their cover. The FSCA’s emphasis on clear disclosure does not remove the need for policyholders to read key documents and ask questions. By 2026, insurers are expected to provide better explanations, but customers must still engage with the information provided.
Claims honesty is another critical area. Fraud and exaggerated claims remain a concern in the motor insurance market. The FSCA supports strong fraud prevention, and drivers involved in dishonest claims risk policy cancellation, blacklisting, or criminal charges.
Finally, drivers should make use of complaints processes when things go wrong. Insurers must have accessible internal complaints mechanisms, and unresolved disputes can be escalated to the Ombud. The regulator actively monitors complaint trends, and consumer feedback plays a role in shaping future supervision.
Technology, data, and fairness
The increased use of telematics, dashcams, and usage-based insurance has added complexity to conduct regulation. Insurers must ensure that customers understand how their data is collected, used, and stored. Decisions based on driving behaviour, such as premium adjustments or claim outcomes, must be explainable and fair.
From a driver’s perspective, agreeing to data-driven policies means paying close attention to consent and ongoing monitoring. Customers should know what behaviour is being measured and how it affects their cover.
Enforcement and what happens if firms get it wrong
The FSCA has made it clear that it will use its enforcement powers where necessary. This includes administrative penalties, directives to change business practices, and, in serious cases, licence suspensions or withdrawals. Public enforcement actions also carry reputational risk, which many insurers are keen to avoid.
As 2026 approaches, the regulator is expected to focus less on education and more on accountability, especially for firms that have had time to adapt but have failed to do so.
Looking ahead
The latest conduct standards are reshaping South Africa’s motor insurance market. For insurers and intermediaries, success in 2026 depends on embedding fairness, transparency, and customer value into everyday operations. For drivers, the changes offer better protection, clearer information, and stronger recourse when things go wrong, provided they meet their own obligations.
Ultimately, the FSCA’s approach aims to build trust in the insurance system. When motor policies are easier to understand, claims are handled fairly, and data is used responsibly, both insurers and drivers benefit. As the new standards settle in, those who take conduct seriously will be best positioned to thrive in the years ahead.
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