Winning a share of the pie

Development in Africa has been rapid, not least in the insurance markets, but there is still a long way to go, according to a market panel. Speaking at a roundtable during the conference about corporate governance, Corneille Karekezi, CEO of Africa Re, said: “If you compare where we were in the 1980s in term of national elections, expropriations and nationalisation, we have moved a long way. [But] we could still do better.” Today he says the business environment is much friendlier. The key, he believes, is “not to surprise people but to take them along with you.” Out of the current growth, Mr Karekezi hopes that African countries will benefit from knowledge transfer, which in turn will enable more markets to retain insurance premium in country to the benefit of the local economy. “All the regulators are targeting retention of knowledge on the continent. The danger is that if we don’t empower our people and train African players, we will lose it,” he says.hideDelphine Maidou, CEO Allianz Global Corporate & Specialty of Africa Location, believes it is important for markets to work together “to keep premium in Africa and show the world that capacity is here.” She says attitudes are changing but, “I am not sure we are fully aligned. Sometimes brokers look for the path of least resistance.” Mr Karekezi added that governments also play an important role in this. In at least one country, he said, only 20% of motorists were insured, despite compulsory third-party liability. The government, however, is doing little to enforce its existing regulations. Sometimes, he said, governments may not know what they have signed up for. In other cases, the impetus is on getting a hospital built and the insurance programme is not important in the scheme of things. “We need to show governments the impact and effect bringing that insurance into effect would have on the economy,” he says. “We have to show governments what Africans are losing out on.” Simon Chikumbu, Aon Benfield Africa CEO, also believes things are changing. “Risk management is increasing and insurance penetration is improving. It is getting there,” he says. Ms Maidou says financing the large infrastructure projects has helped too. “Most of our growth has been insuring infrastructure projects.” Mr Chikumbu says, however, most governments are not insuring such projects once they become operational. “They may insure power plants or oil and gas projects, but harbours or schools either self-insure or they don’t insure. The problem is awareness and it costs money.” Ms Maidou agrees it would be difficult to get more from governments. “For us it is about developing relationships with key people responsible for these projects.” Mr Chikumbu pointed to the different approaches across the continent. He says some countries really rely on large international insurers with head offices outside of Africa, while markets like Kenya are made up of many players, including a lot of smaller local players that do not have access to international markets. Mr Karekezi brought the debate back to training. He says Africa Re tries to encourage governments to improve training for local people. In the future, he believes, it will be more expensive to bring expats into Africa and the emphasis will shift onto local players. Technology will play an important part too, he believes. For example, he says the Nigerian National Petroleum Corporation has US$83m of assets insured in one policy, involving more than 200 locations. “How do you renew that?” he asks. Ultimately, he says the policy was retained by the same firm because no one was able to visit all the locations and price the risk quickly enough. The Africa Re CEO believes that in the future there should be locally-trained engineers able to complete the job. “In the past, there were no infrastructure developments so there was no need to train engineers. But that is changing. Kenya, for example, has discovered oil and they will invest in training. They will be using the experience from other African markets. At the moment it is about managing costs so if it is cheaper to bring someone from Europe, that’s what happens.” Ms Maidou also says there is a need for better information. On some large risks, she says, they will be expected to price a policy on less than 10 pages of information. “You will not find an international carrier who can put together that programme.” She says the input of brokers is essential and it is also crucial that companies give the insurance markets adequate time to price cover properly. “We still have work to do on risk management,” she warns. The three agreed that nothing can be changed overnight and that it will take time for local markets to be trained and then gain the required experience but, as Mr Chikumbu says, African countries have to start somewhere and they need to be offered a small share on these large projects to gain that valuable experience that will enable then to retain a larger slice in the future.

Winning a share of the pie

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