Although cell captive car insurance is not a new term by any means in the insurance industry, it seems that only a small percentage of people are familiar with it. This could be because the legal framework in South Africa does not specifically cater for such a structure. Cell captive car insurance is basically one way of how non-insurance entities (cell captive owner) are able to share in the insurance license of an insurance company (cell captive provider). It is becoming the norm in South Africa for corporate companies to self-insure by means of owning some shares (cells) in a car insurance company (a cell captive).
The cell captive car insurance concept was designed specifically to allow free choice to the insured party, this way making it possible to select the best car insurance to match its risk profile. Cell captive car insurance also gives them the freedom to finance that risk by making use of more profitable, flexible, and non-conventional self-insurance style structures.
In order to regulate the process of cell captive car insurance, a cell captive car insurance license is necessary. This license can be compared to a shareholders agreement. Due to the nature of this agreement, relationships can be very complex and fragile. A cell captive car insurance license should not be mistaken for the more conventional car insurance agreement though, seeing as there are major differences between them. The cell captive car insurance license subsequently allows a company (cell captive owner) to act legally as an insurer. This is done by on-selling car insurance to particular customers without involving an insurance company and all the burdens and expenses connected with them.