South Africa’s financial regulatory landscape is on the brink of one of its most significant reforms in decades. The Financial Sector Conduct Authority’s Conduct of Financial Institutions Bill, better known as the COFI Bill, is expected to reshape how financial products and services are designed, sold, and managed. For motorists and insurers, the implications go far beyond compliance paperwork. From how motor insurance policies are explained to how claims are handled, COFI aims to change everyday experiences for consumers while forcing insurers and intermediaries to rethink their operating models ahead of its anticipated implementation in 2026.
At its core, the COFI Bill is about conduct. Unlike older laws that focused heavily on prudential stability and technical compliance, COFI places customer outcomes at the centre of regulation. This shift is particularly relevant to motor insurance, one of the most widely used financial products in South Africa and one that often generates complaints and disputes.
Understanding what COFI is trying to achieve is the first step in preparing for its impact.
The COFI Bill introduces a single, consolidated framework governing how financial institutions behave across the entire product lifecycle. This includes product design, marketing, advice, sales, ongoing service, and claims handling. Instead of ticking boxes to meet prescriptive rules, insurers and intermediaries will be judged on whether they are delivering “fair customer outcomes”.
For motorists, this means that the regulator will focus less on what is written in policy documents and more on what actually happens in practice. Are products appropriate for the target market? Are exclusions clearly explained? Are claims handled fairly and without unreasonable delays? These questions sit at the heart of COFI.
For insurers and brokers, the Bill replaces a fragmented regulatory environment with a principles-based approach. While this offers some flexibility, it also raises the bar. Firms will need to demonstrate, with evidence, that their conduct consistently supports fair outcomes.
One of the most visible changes motorists can expect relates to how motor insurance products are designed and sold. Under COFI, insurers must clearly define a target market for each product and ensure the product meets the needs, financial capacity, and risk profile of that market.
In practical terms, this could mean fewer “one-size-fits-all” policies and more tailored offerings. For example, a comprehensive motor policy aimed at first-time vehicle owners may need different features, disclosures, and premium structures compared to a policy designed for high-net-worth clients with multiple vehicles.
Sales practices will also come under closer scrutiny. Aggressive selling, unclear comparisons between products, and the use of complex jargon that confuses consumers are all likely to attract regulatory attention. Motorists should expect clearer explanations of cover, excesses, exclusions, and premium increases, particularly at inception and renewal.
COFI also strengthens the requirement that advice must be appropriate. Where a broker or adviser is involved, they will need to demonstrate that the recommended policy aligns with the client’s needs and circumstances, not just that disclosures were made.
Claims handling is an area where motor insurers often face criticism, and COFI directly targets this pain point. The Bill expects insurers to handle claims in a manner that is fair, transparent, and timely. Delays, poor communication, and inconsistent decision-making may be seen as conduct failures rather than operational issues.
For motorists, this could translate into clearer claims processes, better updates during repairs or assessments, and more transparent explanations when claims are rejected or partially settled. While COFI does not guarantee that every claim will be paid, it does raise expectations around fairness and accountability.
Dispute resolution is also affected. Insurers will need to ensure that internal complaints processes are accessible and effective before matters escalate to the Ombud. Patterns of complaints may signal systemic conduct issues, triggering regulatory intervention.
Another important aspect of COFI is how it addresses ongoing service and policy changes. Motorists are often caught off guard by premium increases, changes in terms, or policy cancellations. Under COFI, insurers will be expected to communicate changes in a way that is clear, timely, and meaningful.
This includes renewal notices that genuinely inform customers of material changes rather than burying important information in fine print. It also places responsibility on insurers and intermediaries to regularly assess whether a policy remains suitable for the customer over time.
For insurers, this represents a shift from transactional relationships to longer-term accountability. Maintaining customer trust becomes a regulatory expectation, not just a business objective.
While much of the public discussion focuses on consumer benefits, COFI also presents significant challenges for insurers, underwriting managers, and brokers. Compliance will no longer be about following detailed rules alone. Firms must embed conduct risk management into their culture, systems, and decision-making.
This means investing in staff training, reviewing incentive structures, and ensuring that performance metrics do not encourage poor customer outcomes. For example, sales targets that reward volume without considering policy suitability could be problematic under COFI.
Data and documentation will play a critical role. Insurers must be able to demonstrate how products were designed for specific markets, how risks were explained, and how claims decisions were reached. This may require changes to IT systems, governance processes, and record-keeping practices.
Smaller brokers and intermediaries may feel the pressure most acutely. While COFI applies proportionally, the expectation to evidence fair outcomes applies across the board. Those who fail to adapt may face enforcement action, reputational damage, or even loss of licences.
As 2026 approaches, preparation is key. For motorists, this is a good time to become more engaged with insurance decisions. Asking clearer questions, reviewing policies annually, and understanding rights around complaints and claims will become increasingly important in a COFI-driven environment.
For insurers and intermediaries, early preparation can make the difference between smooth transition and regulatory friction. Reviewing product portfolios, simplifying policy wording, strengthening claims governance, and embedding a customer-centric culture are no longer optional strategic choices. They are foundational requirements for operating in the future financial sector.
The COFI Bill represents more than a regulatory update. It signals a fundamental change in how trust, fairness, and accountability are defined in South Africa’s financial system. For motorists, it promises better protection and clearer communication. For insurers, it demands higher standards and deeper responsibility.
As the industry moves toward 2026, those who understand COFI not as a compliance burden but as a framework for better outcomes will be best positioned to succeed in a more transparent, customer-focused motor insurance market.
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