Tailor made solvency guidelines… key to rapid dev't of Life Assurance in Africa
GHANA's Minister of Finance and Economic Planning, Dr. Kwabena Duffuor has identified tailor made solvency guidelines as one key requirement for the rapid development of Life Insurance businesses in Africa. “African Insurance regulators must ensure that solvency guidelines are made with due recognition to our environments and situation,” he said.
Dr. Duffour was speaking as the guest of honour at the opening of the 2009 African Organisation (AIO) Conference in Accra yesterday. The conference, which began yesterday and ends on the 14th of November, 2009, brought together 170 delegates from over 18 countries to deliberate on issues concerning the global financial crisis and its effect on Life Insurance across the continent.
According to him, regulators in the insurance industry should exercise circumspection in the type of solvency model they adopt especially from the developed markets considering the peculiarities of the African markets and the challenges associated with doing business as compared to attractive financial sectors such as the banking industry.
“Such an approach would afford the budding life insurance industry in Africa the opportunity to develop their capacities and obtain the necessary experience .this does not however, mean that we should lower international standards,” he said.
He noted that the business of life insurance must be conducted under sound regulatory environment and active support of central banks considering the significant contribution the industry makes to the growth and development of nations. He challenged industry players to take cue from what happened to some financial institutions in the event of the global financial crisis to provide as lessons to all life insurance players in the African market.
Life insurance, he said has been used to mobile long term funds for economic development the world over and also served as an avenue for employment for the youth, especially in the areas of life insurance agency. He thus challenged the industry players to make agency profession a lot more attractive to the youth especially in these times that formal employment avenues keep shrinking by the day.
With Africa registering a 5.5% growth in premium income in 2008 according to the Swiss Re Sigma World Insurance Report, Dr. Duffour was confident that Africa had significant potential in that sector. “With low penetration rate and a growing awareness and need for Life assurance products, there is no doubt that Life Assurance is bound to grow in Africa and positively impact on the various economies,” he noted.
Josephine Amoah, Commissioner of the Ghana Insurance Commission on her part said considering the fact that African countries cannot be said to be completely insulated from the global financial crisis, it was imperative for financial regulatory bodies in Africa to devote greater energies to improving corporate governance and Enterprise risk management with their regulated entities.
She however charged the insurance industry to design innovative products to the reach of the largely unreached informal sector.
Chairman of the AIO Life Committee Mahesh Dookhee, also said under the theme 'Gate way to life', burning issues relevant not only to Life assurance, but also to global economic slowdown in history, it'll be interesting to learn from the experiences of various practitioners and to hear and read about strategies that could be implemented in each key area to build a solid business that can sustain future shock”.