Risk mitigation skills essential to develop Africa’s potential

Insurers hold the key for Africa to reach its potential thanks to their risk mitigation expertise, according to the speakers at the recent 40th African Insurance Organisation conference in Cairo. Egyptian Prime Minister Dr Hishan Qandeel, opened the conference, saying the lack of proper infrastructure was the major problem preventing African countries from achieving the needed growth. He said infrastructure built before independence by colonial masters was mostly designed to transport raw materials from the point of production to foreign countries. Now, he said, it was time for better infrastructure to be put in place by African countries. The prime minister hinted Egypt itself was planning to build economic corridors linking Egypt and the rest of Africa, from Egypt to Khartoum, Addis Ababa and South Africa.hideDr Qandeel also suggested Egypt was well positioned to join other African countries in fighting poverty and corruption as it affected the growth of development in Africa. At the conference, insurance figures for Africa were announced, with insurers across the continent generating a premium income in excess of US$66.3 billion in 2011. Non-life business accounted for $21.7 billion representing 7.1%, while the life aspect of the business contributed $44.6 billion, representing 1.2% of world premium income during the year under consideration. Meanwhile, Abdel Raouf Kotb, President of the Insurance Federation of Egypt (IFE), added his belief that Africa is the continent of the future with numerous growth opportunities. “Africa is becoming the continent of the future and the world is carefully following and actively participating in the development of Africa and many have identified our continent as the main source of future growth, opportunities and profitability. “The African economic boom is set to go from strength to strength with the continent outpacing the global average gross domestic growth (GDP). The main challenge is to ensure that this growth reflects on the average citizens and that the riches of our countries have the direct effect of alleviating more Africans out of poverty and tackling inequality,” Kotb said. While the continent has reason for optimism, Mr Kotb warned: “Let us not underestimate the challenges before us. Our continent continues to depend on external demand making us susceptible to global economic slowdowns, particularly in China and the eurozone. “Furthermore, Africa faces many domestic risks such as youth unemployment, political upheavals, low insurance penetration and severe weather just to mention a few. The insurance and reinsurance industry has a pivotal role to play to ensure that these risks are properly identified and managed in order to ensure the sustainable development of our countries.” Greater cooperation was encouraged by AIO President Hassan El-Sayed Mohammed, who also saw opportunities for growth within the insurance industry too. He said that with around 600 providers in 52 markets generating only 1.6% share of the global insurance business, Africa’s true potential had yet to be realised. The opening speeches were followed by a series of panel sessions, ranging from a look at the reinsurance industry challenge in Africa and health insurance to a look at investment and portfolio management. As a first time delegate to the conference, Delphine Maidou, Chief Executive Officer of Allianz Global Corporate & Specialty in Africa, highlighted the panel sessions on renewable energy and micro-insurance, chaired by Corneille Karekezi, Group Chief Executive Officer of AfricaRe. He outlined the relevance of both renewable energy and microinsurance to the wider African insurance markets. Speaking on renewable energy, Ernst Rauch, Head Corporate Climate Centre Climate & Renewables at Munich Re, gave a technical presentation on how renewable energy can be a driver for economic development. He explained 90% of the investments were done in the solar and wind sector and how Africa is ripe for development. In 2011, Africa and the Middle East combined only accounted for US$5.5 billion out of a global pot of more than $250 billion. Mr Rauch outlined the new business opportunities and showed how innovative insurance solutions for renewable energies and new technologies paved the way for development. He explained Munich Re provided insurance solutions along the value chain of renewable energies and new technologies. Some cover examples included PV performance warranty cover; performance warranty cover for concentrator photovoltaic systems; performance guarantees of CSP power plant; guarantee insurance cover for wind energy (serial loss cover); cooperation in the renewable energy sector; and cover of exploration risks for geothermal drilling projects. He also outlined some recent examples of developments across north Africa. In Algeria, for instance, he said planned investment totaled US$60 billion up to 2030, with a project to generate some 1,000 mega watts of power. In Morocco, the government has plans for 500mw generation while Tunisia plans to generate 1000mw, while in Egypt a memorandum of understanding has just been signed in a first step towards renewable generation. On the conference itself, Mr Rauch said: “There were some very interesting and intense discussions at the AIO conference on the role of the insurance industry to support economic development, eg by transferring technology risks from renewable energies from investors’ balance sheets to the insurance market. “The participants were highly interested in the possibilities and chances of renewable energies for their own economic development and in the context of future electricity export options, especially with regard to scarce resources like raw materials.” He added: “In many countries there are already promising initiatives underway to develop wind and solar energy. Political stability and a stable and reliable legal framework in African countries are key to attract international investors in renewable energy projects.” Ms Maidou added: “Never having attended an AIO conference before, it was refreshing to see how involved delegates were in the panel sessions. We not only heard from the speakers but delegates were able to describe their own experiences, for example, a micro-insurance underwriter from Senegal was able to give us details of his experience on the ground in Senegal, which added to the information from the main speakers.” AIO news In line with its membership drive, the AIO has admitted 23 new members from 15 different countries, while the membership status of Prestige Insurance Brokers Limited (Nigeria) was restored. The new members are from A Mundial Seguros (Angola), Botswana Insurance Company Limited, La Loyale-Vie (Cote d’Ivoire), NCA Re (Cote d’Ivoire), Egyptian Saudi Insurance House, Chartis Egypt Insurance Company, Oromia Insurance Company (Ethiopia), Colina Insurance Company Limited (Ghana), Ghana Insurance Association, College of Insurance, Kenya, Mayfair Insurance Company Limited (Kenya), Blue Cross Insurance Inc (Liberia), Emose Insurance Company of Mozambique, Indoco Seguros SAA (Mozambique), Anchor Insurance Company Limited (Nigeria), Boff and Co Insurance Brokers Limited (Nigeria). The others are from Waica Reinsurance Corporation plc (Sierra Leone), Zurich Insurance Company South Africa Limited, Allianz Global Corporate and Specialty SA Limited (South Africa), Oakhurst Insurance Company Limited (South Africa), and New Sudan Insurance Company (South Sudan), Lidwala Insurance Company Limited (Swaziland), and AIG MEA Limited (United Arab Emirates). Membership of the AIO is in two categories, either as full members or associate members. The AIO has 350 members: 339 of which are from 45 countries in Africa and 11 associate members from seven overseas countries. Membership is open to operators in the insurance industry, regulatory/supervisory authorities, insurance training centres, as well as national and regional insurance associations. The AIO has established a number of bodies under its umbrella notably; The African Aviation Pool, The African Oil and Energy Insurance Pool, The AIO Life Committee, The Association of African Insurance Supervisory Authorities, The Association of African Insurance Brokers, The Association of African Insurance Educators and Trainers and The African Centre for Catastrophe Risks. The AIO has consistently been striving to improve its strategic relevance in member countries, as well as to restructure the secretariat to competently support the growth of the organisation. Going forward, the organisation intends to consolidate and strengthen the existing pools and associations set up by AIO, while also partnering with other organisations, notably the World Bank, United Nations Conference on Trade and Development (UNCTAD), International Labour Organisation (ILO) and Access to Insurance Initiative in various capacity-building programmes. The chairman of the Insurance Federation of Egypt (IFE), Abdel Raouf Kotb, will be named the president of the African Insurance Organisation for the next term, following Hassan El Sayed, Chairman of the Association of the Sudanese Insurance and Reinsurance Companies. Mr Kotb has been selected for recognition of his efforts in organising the 40th annual conference in Cairo.

Risk mitigation skills essential to develop Africa’s potential

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