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How to boost microinsurance in West and Central AfricaCIMA’s Microinsurance Learning Sessions “Protecting the Working Poor” concluded in Douala, Cameroon on 10 September 2014. Nearly 350 insurance experts participated in that event. |
The regulatory body CIMA (Conférence Interafricaine des Marchés d'Assurances) is an international organisation in West and Central Africa – mainly French-speaking countries – whose core objective is to work towards the establishment of a single insurance market. The organisation was founded in 1992 in Cameroon’s capital Yaoundé and is based in Libreville, Gabon. In order to achieve this goal, it relies upon a single set of laws and a single oversight authority to which all 14 member states (Benin, Burkina Faso, Cameroon, Central African Republic, Congo, Côte d’Ivoire, Gabon, Guinea-Bissau, Guinea Equatorial, Mali, Niger, Senegal, Chad, Togo) have transferred nearly all of their powers. In 2012, CIMA released a specific and separate microinsurance regulation for its member countries. These rules are now being implemented in a phased approach throughout the region. As part of this effort, the organisation hosted the “Microinsurance Learning Sessions – Protecting the Working Poor” from 8 to 10 September 2014 in Douala, the economic capital of Cameroon. |
Low penetration, high potential |
Microinsurance in the CIMA region is still at a very low level. Despite significant growth with substan-tial annual compound growth rates between 2005 and 2011, up to 35% in the case of Burkina Faso and 17% in Cameroon, insurance penetration is still among the lowest in the world. Besides the previously mentioned countries, Benin, Senegal, Mali and Togo are among the more promising countries in the region. But all four, however, were listed only as “hidden talents”, which is the third category in the Landscape Study describing the status of microinsurance development. Looking at the different lines of business, health microinsurance has not developed significantly over the last few years, while outreach in crop and livestock microinsurance products is growing from a very low base. In the recent past, three agricultural insurance companies have been created in Benin, Senegal and Nigeria with the help of the IFC. Credit life remains the most important across the region. With only one out of eight policies covering more than the outstanding loan, the potential for offering more comprehensive products through credit life is still significant. |
The business case for microinsurance |
In two sessions discussing successful products, participants agreed that at this point in time the use of mobile phones certainly is the most promising distribution channel. However, they may not be used in all lines of business at the same level, as for example in the case of life and accident insurance. At the same time, the large number of clients accumulated in a short space of time involves substantial reputational risks if systems fail, as examples from Zimbabwe have shown. The challenge remains to move from rapidly growing “freemium” models, where the clients are insured and their level of cover depends on the use of airtime but the mobile phone provider pays the premium, to a model where the phone is mainly used only to transfer money, which requires the client to actively pay the premium. |
The way forward |
In a strategy meeting after the conference, representatives from the hosting organisations agreed to continue the process led by CIMA.With the support of the French Development Agency (AFD) and other partners, the General Secretariat of the CIMA will finalize a three-year plan to develop insurance and microinsurance in the CIMA region. This plan will be developed in consultation with the stakeholders responsible for promoting the sector, such as FANAF and has two goals: effective implementation of insurance and microinsurance regulation and the creation of an enabling environment for microinsurance in the CIMA region. Furthermore, representatives from organisations such as the Ministry of Finance of Cameroon have also flagged their interest to continue the discussions in local events. The outstanding commitment of CIMA to promote microinsurance in the region is a fundamental basis for the development of microinsurance in the 14 CIMA countries. The Munich Re Foundation will be a reliable partner in that process and is looking forward to working with CIMA and its partners in the coming years. |
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