AMRAE members warned of continued insurance challenges in Africa

Companies working in French-speaking countries in Africa must be prepared to deal with risks such as civil conflicts and natural catastrophes, which are ever-present in the region. And they would be wise not to expect too much help from the insurance market, said participants in a panel at the 31st Rencontres de l’AMRAE.

In a roundtable on the first day of the event, risk experts with experience in the CIMA group of African nations discussed some of the challenges that come with business opportunities in the region.

For instance, Lydia Belhadj, the legal counsel at RJ Logistic Group, detailed the difficulties she found when trying to consolidate insurance covers across several countries in the region under the umbrella of a global programme.

She could not find any insurers willing to take all the risks, and in some countries she needed four different carriers to place all the risks from a single national unit.

At renewals time, it is not unusual for carriers try to double premium rates, which makes it necessary to open new tenders basically every year, she pointed out.

“There is demand and there is supply (of covers), but they are more beautiful on paper,” she said.

Claims can also be a problem, Belhadj pointed out, as carriers sometimes try to apply exclusion clauses that do not fit the loss event or interpret policies in a way that enables them to deny a claim.

“We have had experiences of major losses where insurers did not come good,” she said.

Belhadj told AMRAE members about one of her company’s insured vehicles that suffered an attack in a country in the region. But the claim was declined, she said, because the insurer applied a terrorism exclusion, even though the local authorities classified it as an episode of vandalism.

Participants in the discussion noted that the CIMA region presents plenty of growth potential for underwriters, as insurance penetration remain below 1% but is increasing fast.

However, Olivier Canuel, the CEO of broker Olea, raised some concerns about market concentration after the merger between Sanlam, a major pan-African insurer, and Allianz.

He also said some insurers in the region are bypassing brokers and contacting buyers directly, which is generating friction when there is a claim.

Canuel expressed concern that offshore insurers are debilitating local markets by making extensive use of fronting structures, and warned that regulation such as the demand in some countries for insurance companies to be controlled by local capital can hamper the development of the industry.

For his part, Etienne de Varax, the head of offer and services at HDI Global SE, said that capital controls in some CIMA jurisdictions can cause problems with reinsurance contracts.

With so many challenges ahead, it is perhaps not surprising that several national risk management associations are being created in the region, with the support of Club Francorisk, a group associated to AMRAE.

Examples include the Democratic Republic of the Congo, Togo, Benin and Senegal, where new associations should start operating soon, according to Francorisk secretary general Marc de Pommereau.

He also said that the Moroccan risk management association, AMRAM, is resuming its activities in 2024.

The CIMA group is composed of Benin, Burkina, Cameroon, Central African Republic, Comoros, Ivory Coast, Gabon, Equatorial Guinea, Mali, Niger, Senegal, Chad, Togo and Guinea Bissau.