Insurers face 100 percent liquidity minimum under FSI 6
South Africa's Prudential Authority published FSI 6 on October 15, 2026, setting a minimum insurance liquidity ratio of 100 percent and mandatory stress testing. The document leaves its commencement date unspecified.
Thirty days of cash coverage
FSI 6 requires insurers to hold adjusted high-quality liquid assets (HQLA) covering at least 100 percent of stressed net cash outflows over 30 calendar days, plus a buffer.
Recognised inflows cannot exceed 75 percent of outflows.
Level 1 assets must represent at least 60 percent of HQLA; single-issuer exposure is capped at 20 percent, except for South African government bonds.
The standard excludes microinsurers, Lloyd's and foreign reinsurer branches.
Unit-linked cash flows where policyholders bear investment risk are excluded from the ratio, but insurers must cover residual liquidity risks.
Unit-linked insurers may seek prior written approval for a lower Level 1 share.
The Authority may impose higher ratios, additional HQLA or specific portfolio requirements.
Stress beyond the first month
Insurers must test acute stress up to three months and protracted stress up to twelve months, reporting 95 percent confidence intervals or sensitivity ranges.
Reverse tests must identify events that exhaust liquid assets.
Boards approve risk appetite, review scenarios at least annually and approve contingency funding plans tested annually.
Actuarial heads assess ratio calculations and assumptions; auditors examine HQLA composition and calculations.
Scenarios must trace primary events into liquidity effects, including collateral calls, surrenders and reinsurance failures.
Liquidity sits apart from capital
The ratio does not change Pillar 1 capital requirements or technical provisions.
Liquidity exposures and stress results instead enter the Pillar 2 Own Risk and Solvency Assessment.
FSI 6 replaces Liquidity Risk Assessment and amends FSI 1, FSI 4 and GOI 3.1, but its commencement date remains blank.