Central bank explores fintech innovations to address insurance challenges

The National Bank of Rwanda (BNR) seeks to attract innovators in financial technologies to explore and introduce digital solutions that can tackle some of the persistent issues in the insurance sector in Rwanda. ALSO READ: What should Africa’s Fintech ecosystem do better? Rwanda is positioning itself to be a FinTech hub in the broader context of the Kigali International Financial Center’s mission to transform Kigali into a regional financial hub capable of attracting foreign investments as well as encouraging the creation of highly skilled jobs in the sector. In 2022, BNR created a regulatory sandbox –an enabling regulatory environment that allows innovative financial services and products to be tested and deployed in a live environment with real customers within a period of 12 months. Chris Songa Musonera, a fintech analyst at the national bank said: “We are looking for innovations that serve the insurance market. We need fintechs to venture into that, identify problems in the sector and leverage available data,” According to him, there are many ways that fintechs can solve different issues in insurance sector including claims reporting and assessment, the accuracy of data entry, attracting more insurance subscriptions among Rwandans, and customizing premium offerings in line with available data, among others. For instance, BNR is hoping to find solutions that can tackle the issue of customizing premium offers whereby a careful motorcyclist is paying the same amount as one who is reckless on the road with many accident claims. “There is no mechanism or a product that can assess the behavior of a driver over the years and provide customized premium subscription of that person,” Musonera noted. ALSO READ: Minister Nsabimana blames low motor-cycle insurance cover on high premiums From the latest BNR annual report (2021-2022), the net profit of the insurance sector increased to Rwf37.2 billion in June 2022 from Rwf32.2 billion in June 2021. There are at least 16 insurance companies licensed by the Central Bank in Rwanda. The sector is dominated by public insurers in terms of assets with RSSB and Military Medical Insurance (MMI) with 62.2 percent of total assets and 41.8 percent of Gross Written Premium (GWP) of the insurance sector. On the other hand, private insurers held 37.8 percent of total assets and 58.2 percent of GWP within that period. As of June 2022, private insurers recorded the growth of the claims in value by 16 percent to Rwf30 billion. ALSO READ: Embracing inclusive fintech: Propelling Rwanda and Africa towards a thriving future Denise Rwakayija, Managing Director of Rwanda Insurers Association (ASSAR), said that technology is a game changer in all fields and the insurance sector is no different. “Even when you look regionally, technology holds a very big significance in the sector and when it comes to FinTechs, we still have quite a journey to go,” she observed. Embracing this development means that it would create efficiencies in internal operations in terms of systems used to deliver services in the insurance sector, Rwakayija explained adding that it would also facilitate the assessment of risks. “Digital solutions would quicken the process of risk assessment bringing a quicker turnaround in settling claims and accelerating other processes that follow,” she explained. Besides the insurance sector, Musonera noted that they are looking for fintech that can provide digital solutions in the agriculture sector and SMEs in terms of products that ease access to finance by helping players in both agriculture and SMEs to create profiles that can be fundable with alternative credit data. To participate in the sandbox, one must generate a solution that improves quality, accessibility, efficiency, and addresses gaps in the financial sector, and prove the capacity to deploy at a large scale after the sandbox period. Since its introduction, the sandbox has attracted at least 31 applications in different sectors such as payment, lending, and funding, among others. Of them, six have advanced to the testing stage. The application for the next cohort of this sandbox regulatory is open during the entire month of August. Over the past years, Musonera said that the fintech industry in Rwanda continues to significantly grow with Rwanda leapfrogging when it comes to adopting fast-moving digital technologies.

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Central bank explores fintech innovations to address insurance challenges