Quality regional reinsurers in Africa

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Regional reinsurers of calibre are emerging in Africa, being structured and asserting a growing appetite and quality of service, says pan-African insurance broker OLEA.

In a section on the African insurance market published in a White Paper on the European, Middle East and African insurance market 2021-2022 by SIACI Saint Honore, a leading European provider of insurance risk management consulting and brokerage services, Mr Olivier Dubois, co-founder and executive chairman of OLEA Holding, and Mr Olivier Canuel, a cofounder and CEO, say that the ratios of these quality regional reinsurers are improving and the commitments made are respected.

However, they do not yet benefit from sufficient rating levels to meet the criteria set by state and private donors involved in the financing of major infrastructure projects.

Trends

With the rise of these new reinsurers, though, the discrepancy between the constraints put in place by the regulator to encourage the share of placement reserved for local players (approved insurers and reinsurers) and the expectations of many international players both in terms of capacity and quality of reinsurance will fade over time.

Some regulatory trends in this respect include:

The requirement to place an increasing part of the insurance cover of a risk located in the country concerned, with insurers or reinsurers approved in the country,

The growing requirement to fill the capacities of a market before being authorised to “export” part of the risk to another market.

local regulators who are increasingly vigilant about the proper application of the rules set.

New players

Apart from the emergence of regional reinsurers, the insurance market in Africa is seeing new developments, namely:

•Takaful insurance, present for a decade and increasingly present in certain markets with the appropriate regulatory framework, and focusing on individual or corporate risk.

Parametric insurance, the ease of subscription of which is attracting a growing number of operators. There is no doubt that parametric insurance should take a continually increasing share of risk over the coming years.

The “pure digital players”: pioneers, they come to provide fully digitalised insurance solutions that appeal to a young and very connected African population. These brokers almost exclusively offer auto and health insurance solutions for individuals, but their rise can be anticipated through broader product offerings reaching businesses soon. This shift towards digitalisation has been initiated in a few countries and is intended to embrace the entire continent in the coming years, with the emergence of new players whose performances are closely observed.

Some countries, such as Ghana, are the leaders, in digitalisation and therefore better at monitoring compliance. In such markets, the police now check in real time via a smartphone application during each vehicle check whether the latter is well insured and listed in the national database set up. It should also be noted that in Kenya the entire administration is digital.

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