Takeovers good for insurance sector, says Rwangombwa

The entry of new firms and takeovers in the insurance industry is good for the sector as it will lead to products innovation, a key ingredient required to increase policy uptake in the country, John Rwangombwa, the central bank governor, has said. Rwangombwa said since the newcomers are reputable international firms with vast experience, they will be able to roll out new products and raise awareness about the importance of the sector among the public. In April, Saham, a Moroccan investment company, revealed it had received the necessary regulatory approvals from the central bank to buy a 66.7 per cent stake in Corar SA for an undisclosed amount. Earlier on this month, Soras Group concluded a $24.3m (about Rwf16.96) deal with Sanlam, a South African financial services firm, which acquired a 63 per cent share in the company. Though the sector has registered significant growth in terms of assets over the years, it is still grappling with low levels of penetration which stands at one per cent, below the continent’s average of three per cent. The global average is between eight and nine per cent. “We have many assets in the country that aren’t insured and people don’t know the risks. Many don’t know that the little money they pay can secure their future in case a calamity befalls them,” he said in an interview with Business Times last week. At the end of last year, total assets of the sector reached Rwf230b from Rwf199b in 2012, which is a growth rate of 16 per cent. The gross premiums also rose by 16 per cent from Rwf68b in 2012 to Rwf78b at the end of 2013. Three insurance companies and three insurance brokers were also licensed during the year and as a result the sector had 11 private and two public insurers by the end of the year. There were also nine insurance brokers, 192 insurance agents and nine loss adjusters. The underwriting profit increased by 101 per cent from Rwf8b in 2012 to Rwf17.12b last year, mainly due to good performance of public insurers. The governor said they were also looking at whether there was need to have more mandatory insurance covers in addition to third party and health insurance covers.