A customary insurance law?

• Jurisdiction: South Africa
• Author: Andrew Hutchison
• Pages: 17-42
• Published date: 20 August 2019
• Date: 20 August 2019
• Citation: (2017) 29 SA Merc LJ 17

A CUSTOMARY INSURANCE LAW?

ANDREW HUTCHISON*

Associate Professor in the Department of Commercial Law, University of

Cape Town

Abstract

This paper will explore risk-spreading practices in the so-called popular

economy in South Africa. Concepts like ‘insurance’, ‘insurance law’ and

‘customary law’ will be interrogated, with the analysis falling on

traditional and more modern informal responses to risk, as well as more

formal responses resulting from the increased penetration of private

insurance in the democratic era. This contribution aims to address

concerns expressed about both informal and formal risk-spreading

practices, to argue towards a conclusion that a pluralistic notion of

‘insurance’ should not necessarily be sacrif‌iced in service of corporate

prof‌it aims. Value remains in customary insurance law, and these

cultural responses may provide evidence of a broader contract value

system to be used in the service of developing the South African laws of

contract and insurance. At the very least, this value system should

inform concepts like ‘consumer insurance law’ and should be fore-

grounded in developing a notion of micro-insurance. South Africa has

the potential to be a world leader in the f‌ield of customary insurance law,

as the failings of a comparable system — funeral insurance in Australia

— demonstrate.

Keywords: insurance; legal pluralism; popular economy; micro-insurance;

indigenous persons; South Africa; Australia.

I INTRODUCTION

This article forms part of a broader inquiry into what is African about

contracting in South Africa.

1

The South African Constitution recognises

two equal, but distinct, sources of law: one, the common law, which

*BA LLB LLM PhD (UCT). The author would like to thank the Law Faculty of the

University of New South Wales and Deakin Law School for hosting him on a short research

visit to Australia in May 2016. The Australian component of the research towards this paper

was done there. This work is based on research supported by the National Research

Foundation. Any opinion, f‌inding and conclusion, or recommendation expressed in this

material is that of the author and the NRF does not accept any liability in this regard.

1

See, further, Hutchison, ‘Decolonising South African contract law: an argument for

synthesis’ in Siliquini-Cinelli & Hutchison (eds), The Constitutional Dimension of Contract

Law: A Comparative Analysis (Springer 2017) 151.

17

(2017) 29 SA Merc LJ 17

© Juta and Company (Pty) Ltd

governs formal sector contracts in South Africa; the other, customary

law, which is a separate, constitutionally recognised, source of law and

applies ‘when ... applicable’.

2

Chanock has described these (from a

historical perspective) as comprising the ‘common law A’ and ‘common

law B’ of South African law respectively.

3

He notes that during the

formative period of South African law in the f‌irst part of the twentieth

century, each had its own set of legislation and courts, which built up

two parallel branches of the law, namely one for the ruling white

population and the other for the (disenfranchised) indigenous African

population.

4

Today, in the democratic era, all law is subject to a supreme

Constitution and, as a result, there is only one system of law in South

Africa.

5

Due to s 211(3) of the Constitution, however, the common law

and customary law remain (to a certain extent) parallel — although now

equal — partners in a legally plural framework of law.

6

Insurance, as provided by private insurance companies in South

Africa, has usually been thought of as an example of a so-called specif‌ic

contract in this country, governed by the common law of contract

(including some insurance contract-specif‌ic terms implied by law),

7

and a few sector-specif‌ic pieces of legislation.

8

There are, of course,

other recognised forms of insurance outside the domain of private insur-

ance companies, particularly certain compulsory forms of social insurance,

such as those funded by workers in formal employment for the contingency

2

See ss 8, 39(2), 173 and 211(3) of the Constitution of the Republic of South Africa, 1996.

On the division of spheres of application between common and customary law, see Du Bois

(ed), Wille’s Principles of South African Law 9 ed (Juta 2007) chaps 2, 4 and 5; Himonga &

Nhlapo (eds), African Customary Law in South Africa: Post-Apartheid and Living Law

Perspectives (OUP 2014) part 1, especially chap 5.

3

Chanock, The Making of South African Legal Culture 1902–1936 (CUP 2001) parts III & IV.

4

Idem 243–244.

5

Pharmaceutical Manufacturers Association of SA & another: in re ex parte President of the

Republic of South Africa & others 2000 (2) SA 674 (CC) para 44; Bato Star Fishing (Pty) Ltd v

Minister of Environmental Affairs and Tourism & others 2004 (4) SA 490 (CC) para 22.

6

On the respective roles of the common and customary law as sources of law, see, for

example, Alexkor Ltd & another v The Richtersveld Community & others 2004 (5) SA 460 (CC)

para 51; Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd 2012 (1) SA 256

(CC) para 23.

7

An authoritative common-law def‌inition by Lee & Honore 2ed (Butterworths 1978) (SA

Law of Obligations, 149 para 586) of the contract of insurance was conf‌irmed in Lake & others v

Reinsurance Corporation Ltd & others 1967 (3) 124 (W) at 127A: ‘[Insurance is a] contract

between an insurer ... and an insured ... whereby the insurer undertakes in return for the

payment of a price or premium to render to the insured a sum of money, or its equivalent, on

the happening of a specif‌ied uncertain event in which the insured has some interest.’

Compare, generally, Reinecke et al, South African Insurance Law (LexisNexis 2013); Davis,

Gordon & Getz: The South African Law of Insurance 4 ed (Juta 1993).

8

See, especially, Long-term Insurance Act 52 of 1998; Short-term Insurance Act 53 of 1998;

and Financial Advisory and Intermediary Services Act 37 of 2002.

(2017) 29 SA MERC LJ

18

© Juta and Company (Pty) Ltd