On 23 March 2026, the Gauteng Division of the High Court handed down a judgment in Elasah Risk Consultants (Pty) Ltd and Another v National Credit Regulator and Others, confirming that construction guarantees* issued by Fusion Guarantees (Pty) Ltd constitute non-life insurance policies under the Insurance Act 18 of 2017.

*The guarantees submitted to the court were conditional guarantees, enforceable upon the contractor’s default.

Substance over form: what the Court decided

Fusion Guarantees and Elasah Risk Consultants approached the court for a declaratory order, contending that the guarantees Fusion issued were nothing more than credit agreements falling under the National Credit Act 34 of 2005 (NCA).

The court was not persuaded. In its view, the guarantees carried all the essential characteristics of insurance:

1. Payment of premiums (even if called “fees”)

2. An undertaking to meet obligations upon the occurrence of an uncertain event
3. Indemnification of loss suffered by a beneficiary (the employer)
4. Reliance on the occurrence of an uncertain future event (e.g., contractor default)

In short, the guarantees were not just financial instruments.  They were insurance contracts in disguise. As the court put it:

“Providers of non-life insurance in the form of construction guarantees are required by law to be licensed under the Insurance Act. This is not merely the ‘official view’; it is, in fact, the law.”   

Registration under the NCA does not shield entities from insurance regulation.  The two regimes can apply simultaneously.

Fusion Interdicted

The Financial Sector Conduct Authority (FSCA) was successful in a counterapplication, resulting in:

1. Fusion’s guarantees declared to be non-life insurance policies;
2. A finding that Fusion was conducting unlicensed insurance business in breach of section 5(1) of the Insurance Act; and
3. An interdict prohibiting Fusion from issuing further guarantees

Practical Implications

The Court confirmed that whether a guarantee falls within the scope of the Insurance Act is a matter to be determined on the facts of each case. In this instance, the Court held that the guarantees fall within the Act’s ambit, as assessed against its definition of insurance business.

For financial service providers and contractors, the message is:

1. If your guarantee indemnifies against contractor default, it likely qualifies as insurance.
2. Registration under the National Credit Act alone is insufficient.
3. Issuing such guarantees without an insurance licence exposes you to legal and regulatory risk.

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