Interview: Thierry Labbé
Given Côte d’Ivoire’s recent growth, what new trends are visible in insurance?
Thierry LABBE: Côte d’Ivoire’s growth spurt in recent years has had several effects on consumer behaviour, and we expect this trend to continue for the foreseeable future. The arrival of large institutions – such as the African Development Bank (AfDB) – has opened up new opportunities for growth. However, the expectations of these players regarding products and services are quite different from those of our traditional clients. This calls for a more adapted offering that caters to a more sophisticated consumer base.
Another significant trend is the formidable growth of the telecoms industry, with the mobile penetration rate now at more than 90%. Given the lacklustre penetration of insurance products, insurance and brokerage companies have actively been seeking to boost penetration via technology; however, there has been a lack of cooperation from telecoms operators. Recent negotiations concluded that telecoms companies would receive 4% of every transaction made via mobile, which made such partnerships unattractive, especially on life products, where margins are significantly lower. The use of mobile technology in insurance will need coordination across the industry, as well as mutually beneficial deals, so that it becomes a viable way of reducing the number of uninsured people in Côte d’Ivoire.
How can insurance criteria be adapted to integrate lower-income households?
LABBE: The integration of lower-income households and small and medium-sized enterprises into the insurance industry will have to come through a complete change in the way the sector is perceived. The concept of insurance in Africa is often associated with unpaid claims, high premiums and a general lack of understanding. For instance, if we take the micro-insurance segment, we have yet to experience significant growth, despite the visible benefits it has for rural communities by providing a safety net for those most prone to risks. Meanwhile, the breakthrough of bancassurance services in recent years has generated a lot of talk about the segment’s ability to boost banking and insurance penetration simultaneously. However, it is worth noting that banks are not as well equipped as insurance brokers to cater to the real needs of clients. The result, therefore, is lower-quality service. Furthermore, it is true that both operators and regulators have been sluggish in adapting their products and services to cater to new trends in demand. In order to increase penetration, there is a real need for new actors and fresh minds to successfully bridge the gap between the products demanded and those offered.
What impact will recent regulatory changes have?
LABBE: We expect the revision of Article 308 of the Inter-African Conference on Insurance Markets ( Conférence Interafricaine des Marchés d’Assurances, CIMA) code – which requires a minimum of 50% of premiums to remain in the CIMA region – to have the unintended consequence of attracting large multinational insurance and reinsurance groups to the region, as they seek to maintain their position in the continent and keep their share of premiums.
An increase in the minimum social capital of insurance companies, from CFA1bn (€1.5m) to CFA5bn (€7.5m), has also been introduced, in what authorities claim is an effort to strengthen the sector. We should remember that the same initiative was taken in 2011, when the social capital was doubled to CFA1bn (€1.5m), yet no change was seen in the industry. Furthermore, a five-year grace period – with an intermediary stage of three years to reach CFA3bn (€4.5m) – will allow players to take the necessary measures to remain in operation.
In conclusion, increasing regulation has little impact on the health of the industry. The focus should instead be on boosting penetration and improving perception of the sector by excluding non-compliant operators.
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