OBG talks to Jean Kacou Diagou, CEO, NSIA

Interview: Jean Kacou Diagou

How can the penetration of insurance products best be increased in Côte d’Ivoire?

JEAN KACOU DIAGOU: Efforts to raise awareness must be pursued through education. In Francophone Africa, there is a lack of knowledge regarding insurance products and they are seen as a type of tax, rather than a mutualisation of risk. Traditionally, village communities have banded together to provide relief in times of need for individual members, but this is less prevalent now. Insurance is replacing this type of solidarity, which is why it is important to increase awareness over the long term. In the short term, insurance has to be commercialised and provided all over the country. This can be done in large part through bancassurance, which benefits from banks’ networks. Furthermore, products have to be developed in line with the population’s buying power, with affordable premiums.

What have been the main effects of Article 13 reform on damages payments?

DIAGOU: The image of insurers has greatly improved, as the rules are now much clearer. Insurance companies were victims of their own activity, given prevailing unethical practices. In effect, many policyholders would not pay their premiums, which generated very large arrears – up to 125% of revenue in some cases – and curtailed the ability of many insurers to make damage payments. The collection rate was previously below 50%, yet since the reform this has increased to over 80%. Fortunately, the overall impact has enabled insurers to improve the payment of damages, and now insurers have two years to collect outstanding premiums arrears before they are written off.

How has Article 13 reform affected transactions between brokers and insurers?

DIAGOU: Brokers attempted to have this reform modified, as in some cases previously brokers would either not collect premiums up front or withhold received premiums to make investments, rather than quickly sending them on to the insurer. Now competition among brokers is better regulated, as policyholders have to pay the entirety of premiums up front, and technical proficiency and service value are henceforth of greater relative importance than payment schedules.

Under the new rules, brokers also have to transfer premiums to insurers in less than one month’s time, which has naturally increased the rate at which revenue is received by insurers. Previously, insurers would blame brokers when they were unable to make damages payments, but now relations between brokers and insurers have certainly improved. In any case, all arrears on outstanding financial obligations between brokers and insurers have to be settled by the end of 2014.

Can life insurance constitute long-term savings?

DIAGOU: I would like the authorities to take notice of the link between long-term savings and life insurance. Most available savings products in banks, such as term deposits, are short-term, whereas life insurance products are long-term, with commitments ranging from 10 to 25 years. Life insurance allows insurers to participate more efficiently in the country’s economic development than non-life products, which are generally annual and therefore on a short cycle.

I think the authorities should put in place incentives for individuals and companies to purchase life insurance for their families and personnel, as has been done in developed countries. This enables the harvest of long-term savings that are more stable than those currently in the banking system. Banks need these types of products as well, as they are currently unable to provide them. The government has a clear interest to encourage this too, as banks have limited capacity to cope with sovereign bond emissions with maturities of over five years, whereas insurers have the capacity to make long-term commitments. In summary, life insurance needs to be better understood and explained in schools, and fiscal incentives ought to be adopted to promote the spread of life insurance products.

Anchor text: 
Jean Kacou Diagou

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The Report: Côte d'Ivoire 2013

Insurance chapter from The Report: Côte d'Ivoire 2013

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