Africa:Insurance regulatory control advances in markets across the continent
Regulators across the continent have displayed the propensity to enhance the operation and development of insurance and reinsurance business within their respective regions and the African insurance industry in general, notes Bahrain-headquartered Trust Re.
In its report entitled “Analysis and Focus on Reinsurance and Insurance-Continental Advancements–Africa”, Trust Re says that within the continent, regulators can operate at opposite ends of the spectrum from being too lenient to being too burdensome with their requirements.
From varying perspectives, some measures may be considered protectionist in retaining the risk within the local market, inconsistent with neighbouring markets and burdensome in restricting market prospects.
Examples of the regulatory reforms and advancements currently being implemented across the continent include:
- Working towards adopting common regulatory standards, stability of the sector and regional integration to promote cross border trading of insurance services.
- Focusing on corporate governance, capital, investment, stress testing and supervision of insurance firms.
- Adopting a risk-based capital approach that aims to strengthen the market and improve its conditions. However, apart from the positive shift to a risk-based capital environment, if the focus on risk transfer remains totally or significantly within the local market, protectionist views arise and the downside to this is that these markets can potentially detach themselves from competitive foreign capacity, innovative underwriting expertise and the ability to diversify risks properly to avoid local economic impact.
- Nurturing a regulatory environment with prudential regulation under a Solvency Assessment and Management (SAM) framework that is similar to Europe’s Solvency II and formulating business regulations under the Retail Distribution Review framework.
- Promoting innovation and digitisation to increase insurance penetration.
- Pursuing a comprehensive strategy for non-banking financial services aimed at developing non-traditional and innovative solutions with priorities focusing on raising capital and insurance rates.
In Africa, Trust Re undertakes market intelligence reviews, business partners’ seminars, market visits and develops long term business relations with both brokers and cedants. As a result, the reinsurer is able to obtain a firsthand view of these dynamic developments and the way in which they affect the insurance and reinsurance industry.
Culled from MIDDLE EAST INSURANCE REVIEW https://www.meinsurancereview.com/News/View-NewsLetter-Article/id/47419/Type/Africa/Africa-Insurance-regulatory-control-advances-in-markets-across-the-continent/1/sid/329976?utm_source=News&utm_medium=Email&utm_campaign=Africa_NL&utm_source=News&utm_medium=Email&utm_campaign=Africa_NL