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East Africa seeks to develop insurance sector

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East Africa seeks to develop insurance sector

East Africa’s insurance regulators have decided to promote cross-border insurance products and services.

Joint resolution for insurance main actors

East Africa’s insurance regulators have decided to promote cross-border products and services. The objective is to address the challenges associated with low insurance subscriptions and penetration in the region. Members have also agreed to coordinate joint innovation initiatives across member States.

Under the East African Insurance Supervisors Association (EAISA), the 7th extraordinary meeting of the Executive Committee (ExCo) was held in Eldoret, Kenya. The meeting agreed to adopt a joint approach to the supervision of insurance groups. The main task is to monitor, control, and coordinate the stability of the cross-border sector.

Speaking on behalf of all EAISA members, ExCo President Alhaj Kaddunabbi Ibrahim Lubega, Director General of the Insurance Regulatory Authority in Uganda, emphasized the importance of coordinated regional initiatives in research and development for effective policy formulation and implementation.

Harmonization of legal frameworks among member countries

The regional insurance landscape is on the verge of significant change with the adoption of a strategic plan. Member countries must harmonize their legal and regulatory frameworks to provide a unified basis supporting cross-border insurance operations by September 2025.

Members also have until June 2025 to develop and adopt risk management and solvency standards. The intended to ensure that insurers in the region maintain adequate financial reserves to cover potential risks and solvency requirements.

Comprehensive plan to establish a standard policy

The plan revolves around five thematic areas:

  • Insurance sector stability
  • Insurance market development and innovation
  • Consumer protection
  • Institutional sustainability and cooperation
  • Sector collaboration and integration

Key outcome areas include claims handling and settlement, fair pricing practices, African manufacturing hub establishing, product diversification, insurance inclusion, market expansion, crisis management, stress testing, and market surveillance.

This board aims to develop and adopt regional frameworks for information sharing and data standardization, group-level risk assessment, and cross-border monitoring. It also plans to develop and adopt regional financial literacy or insurance education frameworks, risk-based supervision, certification of insurance professionals and actuaries, guidelines for market conduct and insurance claims, among others.

Insurance Access in Africa

The insurance access rate is still low in Africa. This situation includes key economies such as South Africa and Nigeria. Although insurance is a vital safety net for customers exposed to external threats such as health issues, economic disruptions, and natural disasters, many Africans do not have access to it. Figures show that the contribution of the insurance sector accounts only for 3% of Africa’s GDP.

Africa’s overall insurance access rate is 2.78%, compared to the global average insurance coverage rate of 7.23 %. In the East African Community (EAC), Kenya leads with an access rate of 2.43 %. Rwanda follows with a percentage of 1.70, Uganda at 0.84 %, Burundi at 0.77 %, and Tanzania at 0.53 %.

Insurance suscription

According to industry experts, low awareness of insurance is one of the threats hindering the growth of the insurance sector and policy adoption. « Low insurance awareness and the public’s low confidence in insurance services within the member States pose a significant threat. This compromises the uptake of insurance and sector growth », said Kiptum, an insurance expert.

There are also issues of incapacity to cope with technological changes due to the rapid pace of technological advancements. Geopolitical dynamics also affect insurance penetration, according to experts. Conflicts and trade disputes are included in this, impacting the insurance sector’s stability within the East African Community (EAC). Political instability and uncertainties also affect regulatory initiatives and cooperation.

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