Soares: Africa Insurance Market Loses  $8bn Premium to Foreign Insurers Annually

Ebere Nwoji 

The former Secretary General, Africa Insurance Organisation (AIO), Ms Prisca Soares has stated that African regional insurance market loses   $6 to $8 billion annually to western markets mainly through brokerage and reinsurance services.

She said AIO arrived at the above figure based on a study on premium flight it conducted in 2016 and insisted that rather than abating, the situation has been worsening year- in -year out because of preference for foreign markets to local markets by the regional business operators.

Soares, who disclosed this during a panel session at a conference organised by the Nigerian Association of Insurance and Pension Editors (NAIPE), however, said the situation in Nigerian insurance market was better than other regional markets due to federal government’s local content law.

According to her, “In 2006, AIO conducted study and saw that there is serious premium flight. Africa is losing $6billion to $8 billion premium annually.”

She said government should ensure that in signing contract for foreign direct investment (FDI), insurance should not be wished away.

She said NAICOM as adviser to government on insurance matters is in position to do that warning that if NAICOM was not involved in bilateral agreements, insurance would be wished away.

She urged the federal government to ensure fulfillment of its agenda on rule of law by enforcing law on compulsory insurance of building.

THISDAY had in a previous report quoted the regional insurers as saying that annually, huge capital leave the shores of the regional and sub-regional markets to overseas markets like London and America through reinsurance, brokerage business and underwriting of high -tech and huge ticket businesses due to lack of capacity, technical know-how and lack of reasonable capital.

The report said the development has become so pronounced that African insurers despite size have in most cases acted as agents to overseas insurers.

In search of solution to the problem the regional insurers at the recent West African Insurance Company Association (WAICA)’s education conference held   in Lagos, agreed that cooperation and collaboration among the regional and sub regional insurers would go a long way to strengthen them for optimal performance.

One of the participants, Patrick Loweh, an Assistant Manager W-Safe Reinsurance Limited, Cameroun, spoke on the need for cooperation among the sub-regional insurers.

He said one of the take home lessons from the conference was on how the insurers could use rating to develop, reposition themselves for global competition. 

According to him, this indicates that the market was working towards its development towards increasing penetration rate in the sub region. He recommended that insurers across the sub region should strive to practice what they preach. 

Also Chief Finance Officer Unique Insurance Company Limited, Accra-North Ghana, Mohamed Adamu said the sub regional insurers needed collaboration to stand strong.

He said collaboration would also help them to underwrite big-ticket businesses, which is flown abroad here.

“If the cooperation is there we can put ourselves together to retain our premium here rather than seeking reinsurance strength abroad. So we can put ourselves together and stop seeking reinsurance abroad and avoid capital flight, which happens when we seek reinsurance abroad, “he said.