At less than 3 per cent insurance penetration rate, Rwanda is one of the countries with the lowest insurance uptake levels in the region. Many stakeholders and pundits have always blamed this state of affairs on lack of awareness about the importance of insurance among the public.

However, some experts say the problem goes deeper, and partly blame insurance companies for being short on creativity and innovation to develop products that are market and sector-specific.

Sector players also blame lack of enough professionals in the insurance industry as another contributing factor to the low levels of insurance penetration in the country.

According to Jean Pierre Majoro, the executive secretary of the Association of Insurance Companies in Rwanda, insurers have ignored some of the sectors in the economy, like the small-and-medium enterprises (SMEs), which could spur policy uptake if they were targeted.

Majoro challenged insurance firms to develop tailor-made products for specific sectors. Agriculture, one of the key drivers of the economy has largely been neglected by insurers, who claim it is too risky presently.

However, Majoro says insurers should create micro-insurance products, targeting SMEs and the agriculture industry, arguing that this approach could help change the tide and make the industry more competitive.

"Micro-insurance is ideal for our market and could help increase insurance penetration in the country if sector players embrace it. The regulator has already put in place an enabling policy. It is up to insurers to take advantage of this and invest in skills development to propel innovation among staff so that they are able to create insurance products that suit all market segments,” Majoro told Business Times.   

He added that insurance companies need to analyse the ongoing activities in the informal sector and develop products accordingly.

Insurers are lobbying for the establishment of a professional school of insurance as one of the ways to help boost skills in the sector.

They also want to see insurance incorporated into the national school curriculum, from secondary level.

This, according to Dr Blaise Uhagaze, the secretary general of the Association of Rwanda Insurers, will help increase the skills pool and eventually make the sector more competitive locally and in the region.

‘SMEs reluctant’

Esdras Nkundumukiza, the commercial director in charge of SMEs at SORAS, a local insurance company, said though there are already products tailored for their needs, many of them are reluctant to take up policies to cover their businesses. Nkundumukiza noted that many of the local SMEs think insurance is not important for small businesses. He challenged SMEs to embrace insurance, saying it is a fall-back in case of calamities, like when a fire guts their businesses as was the case last year, when dozens of SMEs lost their merchandise in fire in different parts of the country. 

"We conducted a number of campaigns on micro-insurance products, but the response was poor. It is, therefore, important for the informal sector to work with insurers and safeguard their enterprises. This is a win-win for both the SMEs and insurers,” he argued.

Rwanda’s insurance sector recorded a 19 per cent increase in total assets during the first half of the year, hitting Rwf295 billion, up from Rwf247 billion in June last year, and Rwf272 billion as at the end of December.

The sector’s capital and reserves grew to Rwf218 billion, from Rwf180 billion over a similar period in 2014, which was an increase of 21 per cent. However, sector experts believe the performance could have been far better, if market players were innovative or embrace new tools, including Information and Communication Technologies (ICTs), according to Majoro.

Experts say insurance is essential for the country to achieve double digit growth figures by 2018, under the second Economic Development and Poverty Reduction Strategy (EDPRS II).

The sector is comprised of insurance and pension institutions, including eight  non-life insurers, four  life insurers,  two public medical insurers, 14  insurance brokers, 322  insurance agents,  nine loss adjusters, as well as one pension/social security fund, Rwanda Social Security Board, and  53 private pension schemes.

Sangono Kagaba, the director for non-banking institutions supervision at the central bank, said the country’s insurance industry is still young, with a lot growth potential that the private sector should exploit to expand and become more profitable.

"The central bank super¬vision of the sector has increased public confidence, re¬sulting in the growth of the sector registered in recent times. It has also been able to acquire long-term resources and, consequently, helped strengthen the country’s capital market,” he said.

Price undercutting tamed

Meanwhile, the National Bank of Rwanda and the insurance sector players are working together to address the challenge of price undercutting.

According to John Rwangombwa, the central bank governor, the practice    that had slowed the sector’s profitability the previous year "has been brought under control”.

"We have worked with the association of insurers to fix the issue, and I can now say that the situation has improved,” Rwangombwa said.