Interview: Jean-Claude Ngbwa
How can insurance services be increased in Gabon?
JEAN-CLAUDE NGBWA: Insurance services penetration is very low in CIMA countries. Gabon must create new products adapted to the target population and their buying power. Our organisation has put in place a new legal framework for micro-insurance. This framework was approved by our Council of Ministers in April 2012, and by January 2013 we plan on having the necessary provisions in place to encourage companies to develop micro-insurance products. Micro-insurance is technical and costly as it concerns diverse groups of people for whom traditional insurance products are not designed. We have encouraged partnerships between insurers and investors to bring these plans to fruition. Additionally, we would like for the Council of Ministers to accept other mandatory insurance products, such as merchandise transport insurance, and mass products for groups such as students or the civil liability of employees.
To what extent can regional and national reinsurers play a bigger role in the sector?
NGBWA: In creating the Gabonese Reinsurance Commercial Society, the government intends to keep savings in the country so that they can be put towards financing the economy. Reinsurance mobilises significant funds by collecting premiums, but is often located abroad. This fronting results from the significant level of risk in the oil sector, for which there is no local capacity to reinsure. It is necessary for the company to be able to capture enough local risk to compete with reinsurance that can be transferred abroad.
At the regional level, there is CICA-Re and Africa-Re. There is a need for them, but the question is will they be endowed with sufficient financial capacity to absorb African or Gabonese risk locally. Reinsurers have to be capable of managing risk and have good links with reinsurers abroad to mutualise risk. We are preparing a framework to control reinsurance activity in CIMA countries to avoid the emergence of significant risks due to the current lack of regulations. Certain reinsurers, of which there is no trace anywhere else in the world, have opened in CIMA countries. National reinsurers operate according to local law, wherein they benefit from the receipt of legal transfers of premiums from insurers, but we think these transfers will progressively disappear for them to compete internationally.
What is the primary motive behind changes made to the CIMA Code’s Article 13?
NGBWA: With CFA600bn (€900m) in revenue in 2010, premium arrears reached CFA200bn (€300m), weakening the financial position and capital adequacy of insurance companies, which in turn affected accident payouts to policyholders. We wanted to leave no latitude for insurers to arbitrate between selling policies with staggered premium payments or full payment up front. Henceforth, coverage is not guaranteed until policyholders have fully paid their premium. The results over the first two quarters of 2012 have been positive. Insurers have not had difficulties in receiving premium payments, and insurance companies’ finances have improved such that they shouldn’t have trouble making damages payouts. We have a team on the ground ensuring premium payments are received in cash, on time and are not staggered. We are also working with the National Insurance Directorate to ensure damages payouts are made in a timely manner, and that received premium payments are not used for other purposes.
How have recent regulatory reforms affected the activity of insurance brokers?
NGBWA: Brokers are responsible for collecting savings and transferring it to the risk-bearer in exchange for a commission. However, we noticed the account balances of certain brokers were extremely high, as they were not transferring premium payments to insurers in a timely manner. This weakened insurers’ financial positions, which negatively affected insurers’ damages payouts to policyholders. So, we have created a timeframe under which brokers must make these transfers.
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