The potential of the cell captive structure for sub-Saharan Africa

This report explores how cell captive insurance structures can address structural constraints in sub-Saharan African (SSA) insurance markets, such as fragmentation, lack of innovation, and limited capacity for specialised risks. It identifies four primary use cases—specialised risk management, retail innovation, market participation, and offshore financial centre development—and provides a decision framework for regulators to design appropriate legal and supervisory structures.

• Cell captive insurance allows a central licensed insurer (the sponsor or promoter) to create ring-fenced cells for other organisations (cell owners) to insure their own assets or the risks of their clients. This enables corporates to access captive insurance benefits without the need to establish their own licensed insurance subsidiary.
• Cell captives can bridge protection gaps for specialised corporate risks in markets where local insurers lack the capital, skills, or capacity to offer tailored cover. This is particularly relevant in sectors like oil and gas in Ghana, where local content requirements may otherwise create efficiency costs or coverage gaps.
• Third-party cell captive structures drive retail innovation by allowing non-insurance entities (such as MNOs or retailers) to design products and share in underwriting profits without needing a full insurance licence. South Africa is a global pioneer in this model, where it is frequently used by insurtech ventures to bypass legacy insurer systems.
• The structure serves as an 'incubation' or graduation pathway for new market entrants, allowing them to build capital and experience before applying for a full insurance licence. In South Africa, this has been used as a formalisation pathway for previously informal entities, such as burial societies and funeral parlour groups.
• For emerging offshore financial centres like Mauritius and the Seychelles, cell captives can attract multinational companies and generate revenue beyond domestic demand. However, success depends on a sophisticated regulatory framework that can compete with established global domiciles like Guernsey.
• There are three primary regulatory models for asset separation: Protected Cell Companies (PCC), where the PCC is a single legal entity with statutory ring-fencing; Incorporated Cell Companies (ICC), where each cell is a separate legal entity; and Shareholder Participation Agreements (SPA), which rely on contractual ring-fencing.
• South African regulators prefer the SPA structure because they believe statutory ring-fencing of third-party business would contradict the nature of insurance and risk pooling, and that policyholders rely on the reputation and size of the insurer rather than the cell owner.
• Capital requirements for cell captives are determined by funding needs and statutory rules. In South Africa, a minimum capital requirement of ZAR 1 million (approximately USD 70,000) was instituted for all cells in 2018 to ensure cell owners have 'skin in the game'.

APA

Dunn, M., Gray, J., & Hougaard, C. (2019). The potential of the cell captive structure for sub-Saharan Africa. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/FSDA-and-Cenfri_The-potential-of-the-cell-captives-structure-for-sub-Saharan-Africa.pdf

Chicago

Dunn, Matthew, Jeremy Gray, and Christine Hougaard. The potential of the cell captive structure for sub-Saharan Africa. FSD Africa, 2019. https://fsdafrica.org/wp-content/uploads/2025/05/FSDA-and-Cenfri_The-potential-of-the-cell-captives-structure-for-sub-Saharan-Africa.pdf.

Wikipedia

{{cite report |last1=Dunn |first1=Matthew |last2=Gray |first2=Jeremy |last3=Hougaard |first3=Christine |title=The potential of the cell captive structure for sub-Saharan Africa |publisher=FSD Africa |date=August 2019 |url=https://fsdafrica.org/wp-content/uploads/2025/05/FSDA-and-Cenfri_The-potential-of-the-cell-captives-structure-for-sub-Saharan-Africa.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dunn2019potential, author = {Dunn, Matthew and Gray, Jeremy and Hougaard, Christine}, title = {{The potential of the cell captive structure for sub-Saharan Africa}}, institution = {FSD Africa}, year = {2019}, month = aug, url = {https://fsdafrica.org/wp-content/uploads/2025/05/FSDA-and-Cenfri_The-potential-of-the-cell-captives-structure-for-sub-Saharan-Africa.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }