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© Dr. Schanz, Alms & Company AG
The African Insurance
Regulation Directory
Executive Summary
May 26, 2015
© Dr. Schanz, Alms & Company AG2
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG3
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG4
The inaugural African Insurance Regulation Directory
First comprehensive study on insurance regulation and supervision
in Africa
Research reflects the status quo of up to the middle of 2014
Analysis based on the responses to a standardized questionnaire sent to 52 African regulators
The African Insurance Regulation Directory
Improve the transparency of African insurance regulation
and supervision
Contribute to the further development and
strengthening of African insurance markets
© Dr. Schanz, Alms & Company AG5
Methodology
Africa Re Data collection and collation in close
cooperation with 52 African regulatory bodiesProvision of additional information and insights
The African Insurance Regulation Directory
Dr. Schanz, Alms & CompanyQuestionnaire design
Data analysis
Report write-up
Report layout, design and artwork
© Dr. Schanz, Alms & Company AG6
ChallengesData availability, collection and consistency
The availability of consistent and high quality data is critical to the survival and prosperity of insurance companies, the industry and to meet obligations to policyholders.
IAIS Insurance Core Principles 2 (Supervisor):
“The supervisor publishes information on the insurance sector, about its own role and how it performs its duties.
Unless reliably published by other parties in a timely fashion, the supervisor publishes information and analysis about the financial condition of the insurance sector.”
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG7
The inaugural African Insurance Regulation Directory
Key recommendations
Strengthen Financing of Regulatory Bodies
Introduce RBC (Risk Based Capital) Concepts
Establish Policyholder Protection Funds
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG8
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG9
Africa’s largest insurance markets (excl. South Africa),
premiums by type, 20131/20122, US$ bn
Moroc
co
Niger
ia
Egyp
t
Kenya
Alger
ia
Angol
a
Namib
ia
Tuni
sia
Maurit
ius
Botsw
ana
Ghana
Cote
d'iv
oire
Camer
oon
Libya
Suda
n
Ethi
opia
Gabon
Sene
gal
0
1000
2000
3000
3'180
1'863
1'851
1'520
1'440
1'136 943
830 688
473 446 415 294 288 285
219 198 183
Life Non-life
The African Insurance Regulation Directory
1 Morocco, Nigeria, Egypt, Kenya, Algeria, Angola, Namibia, Tunisia and Mauritius. Source: Swiss Re sigma2 Botswana, Ghana, Cote d’Ivoire, Cameroon, Libya, Sudan, Ethiopia, Gabon and Senegal. Source: African Regulatory Authorities, data compiled by Africa Re. Split between life and non-life premiums for these nine countries based on own estimates.
© Dr. Schanz, Alms & Company AG10
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG11
African IAIS Member Countries, 20131
The African Insurance Regulation Directory
Egypt
Nigeria
Morocco
Ghana
Guinea
KenyaUganda
Tanzania
RwandaBurundi
ZambiaMalawi
BotswanaNamibia
South Africa
Lesotho
Swaziland
Mauritius
Cabo Verde
Tunisia
Mali
Chad
CentralAfrican Republic
Gabon
Cameroon
Equatorial Guinea
SenegalBurkina Faso
Republicof the Congo
Cote d‘Ivoire
Togo
Mauritania
LibyaAlgeria
Sudan
SouthSudan
Ethiopia
Somalia
Democratic Republic of the Congo
Angola
Zimbabwe Madagascar
Eritrea
Djibouti
IAIS Member Countries CIMA Countries
Sierra LeoneLiberia
Niger
Mozambique
Benin
The IAIS (International Association of Insurance Supervisors) has 20 African members, representing 33 countries. 19 of the members represent individual countries; CIMA (Conférence Interafricaine des Marchés) is an institutional member, representing 14 countries from francophone West and Central Africa.
© Dr. Schanz, Alms & Company AG12
Regulated re/insurance companies in Africa, 20141
The African Insurance Regulation Directory
1. Source: Regulatory authorities, data compiled by Africa Re2. Also included in the domestic life and non-life companies category3. Also included in the domestic reinsurance category4. Also included in the respective categories
Type of licensed entity Number of licensed entities
Domestic life insurance companies 233
Domestic non-life insurance companies 397
Domestic composite insurance companies 166
Foreign life insurance companies 48
Foreign non-life insurance companies 84
Foreign composite insurance companies 43
Domestic reinsurance companies 40
Foreign reinsurance companies 36
Total 1047
Majority government-owned insurance companies2 36
Majority government-owned reinsurance companies3 7
Re/insurance companies with a minority government ownership4 9
© Dr. Schanz, Alms & Company AG13
Analysis of African Regulatory and Supervisory Regimes: Topics
The African Insurance Regulation Directory
Regulatory and Supervisory Authorities
Scope of Regulation and Supervision: General, cross-boarder regulations
Licensing: Financial, other requirements
Ongoing Supervision: Solvency, Reserves, Investments
Suspension and Termination of Business Operations
Insurance Companies in Difficulties
Others:
Supervision of Intermediaries Financial Reporting and Disclosure Compulsory Insurance Compulsory Reinsurance Cessions
Microinsurance Regulation in Africa
© Dr. Schanz, Alms & Company AG14
Minimum capital requirements1 and average premiums per
insurance company, selected African countries, 20132
0 5 10 15 20 25 30 350
50
100
150
200
250
300
350
South Africa
Morocco
Algeria
Minimum Capital Requirement,(US$mn)
Average Premium / Insurer (US$mn)
CIMA
Angola
Egypt
TunisiaKenya
Ghana
NigeriaMauritiusNamibia
The African Insurance Regulation Directory
1. Composite insurer’s minimum capital requirements (if available)2. Size of the bubble represents market size. Source: African regulatory authorities, data compiled by Africa Re. 2013 market sizes partly based on own estimates.
© Dr. Schanz, Alms & Company AG15
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG16
1. Strengthen Financing of Regulatory Bodies
The African Insurance Regulation Directory
Findings
In about 50% of all African countries, regulatory bodies are solely financed by the state. In most OECD countries, the authorities are financed by the insurance industry, sometimes supported by the government (minority funding).
Recommendation
Increasing the financial resources of regulatory bodies will also attract more insurance professionals to Africa and limit the ‘brain-drain’. African insurance market players should play a stronger role in financing.
Expected Benefits
Only with adequate human and financial resources African authorities will be able to fulfil their missions. Strong regulatory regimes as well as strong and stable markets will ultimately benefit all market actors.
© Dr. Schanz, Alms & Company AG17
2. Introduce RBC (Risk Based Capital) Concepts
The African Insurance Regulation Directory
Findings
In many African countries, solvency capital is not yet referred to as the difference between assets and liabilities. In most of these countries, minimum capital requirements are used instead.
Recommendation
Globally, in more and more countries, regulatory capital requirements are becoming risk-based to reflect the economic impact of balance sheet risks. More African countries should consider introducing RBC concepts.
Expected Benefits
Benefits are not limited to an im-proved risk mea-surement process or a better determi-nation of appropri-ate levels of capitali-zation. The intro-duction of RBC concepts will ulti-mately strengthen the African insurance industry.
© Dr. Schanz, Alms & Company AG18
Potential widespread benefits of introducing RBC principles
The African Insurance Regulation Directory
Source: Dr. Schanz, Alms & Company AG
Refer to solvency as the difference between assets and liabilities
Introduce and apply a risk based capital concept
Increased need for Africa based insurance actuaries
Strengthening of technical capabilities
Improved ability to retain more risk
Improved ability to make money on risk
Higher profits materialising in Africa
More funds available for reinvestment
Strengthened African insurance industry
© Dr. Schanz, Alms & Company AG19
3. Establish Policyholder Protection Funds
The African Insurance Regulation Directory
Findings
One of the primary objectives of insurance regulation is the protection of policyholders against insolvency of insurance compa-nies. So far, only a minority (about one third) of African countries has esta-blished policyholder protection funds.
Problem
Policyholders are the creditors of insurance compa-nies. Information asymmetry between policyholders and insurers and a lack of financial literacy hinder the assess-ment of financial soundness of insu-rance companies by policyholders.
Recommendation
These funds can help to maintain the public’s confidence in insurance busi-ness. They need to be carefully de-signed to minimize potential drawbacks such as moral hazard or a high financial burden on soundly managed companies.
© Dr. Schanz, Alms & Company AG20
Contents
Introduction
Africa’s Insurance Markets
African Insurance Regulation and Supervision
Key Findings and Recommendations
Country Sheets
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG21
Country Sheets: Examples
The African Insurance Regulation Directory
© Dr. Schanz, Alms & Company AG22
Contact
Dr. Schanz, Alms & Company AGDufourstrasse 24CH-8008 ZurichSwitzerland
Andreas BollmannPartner
Fon +41 44 256 1085
Mob +49 172 896 [email protected]
The African Insurance Regulation Directory
African Reinsurance Corporation
Africa Re Building
Plot 1679 Karimu Kotun Street,
Victoria Island
PMB 12765
Lagos, Nigeria
www.africa-re.com