African insurers target to close gap on 25% cession to offshore markets

If resolutions at the recently concluded African Insurance Organization Conference and General Assembly held in Marrakech, Morocco will be implemented contentiously, African Insurance industry would have taken a major step towards closing an over 25 percent cession to offshore reinsurance blamed on lack of capacity and expertise.

The trend which stakeholders at the forum agreed affects major markets in the continent excluding South Africa and some few emerging African economies, were mainly due to the low capitalization of local Insurance Companies and their lack of access to the most enhanced tools in terms of insuring and quantifying risks.

Though the growth potential of the sector they noted is undeniable looking positive, it should be noted that some areas for reflection must focus on federating the actors of the African Insurance market in order that together, we can converge towards a growth dynamic that reflects our continent; young and promising.

The 43rd AIO Conference on the topic “African Insurance amidst Current and Emerging Challenges” agreed that to achieve the set objective the entire industry must work in synergy to consolidate the actors of the emergence of major Pan-African Groups capable of investing and developing high levels of expertise locally and building the necessary capacities to meet sector needs.

There must be harmonizing legal frameworks governing the Insurance and Reinsurance Sector so as to restore increased and viable transparency for investments; Further strengthen the role of national regulatory and supervisory authorities by allowing them more autonomy and the means in the interest of the end consumer; Creating an enabling legal and operational environment for access to financial services for the poorest segments of the population and Further enhancing the microinsurance aspect which has recorded the highest rate so far in terms of sector growth;

And finally, the assembly resolved to scale up the potential of African reinsurance and supporting the professionalization of this sector beyond its current challenges which are currently confined to intermediation missions, for want of local sustained expertise and holding capacities.

During her speech, the Chairperson of the African Insurance Organization and Chief Executive Officer of the Tunis Reinsurance Company, Tunis Re, advocated for the development of a resilient African insurance market; a challenge which she urged all participants to embrace in spite of the structural obstacles facing Africa.

“Common growth strategies should be adopted in terms of regulations, sharing and transmission of expertise, developing agricultural insurance, mainstreaming new risks such as terrorism and others, mitigating the impact of sovereign ratings on African reinsurance and finally, areas of complementarities and cooperation to undertake in order to address the current challenges of the African Insurance market.”

The second session Conference saw participants agreeing that even though international terrorism is gaining ground and stretching more and more beyond frontiers, it should be noted that common solutions should be encouraged in order to tackle this atrocious trend; a trend which public authorities should guard against by setting up aggregated capacities continent-wide, in the form of pools, as is the case with developed economies.

The involvement of States in the coverage of the said risks, is key to setting up a supranational coverage mechanism in the form of Pools.

Though developed countries have their own pools and compensation funds backed by solutions based on global financial reinsurance, it should be borne in mind that these local African capacities cannot be considered strong enough to shield the population without involving the joint will of States in a spirit of cooperation, experience and skills sharing.

Modestus Anaesoronye