On the eve of the meeting of African insurers, the Secretary General of CIMA, Blaise Abel EZO’O ENGOLO talks about the achievements of the Institution and the challenges to be met in terms of technological and financial innovation as well as communication. .
You were elected a year ago and you took up your duties as Secretary General of the Inter-African Conference on Insurance Markets (CIMA) in April 2021. Could you tell us about this institution, particularly with regard to concerning the objectives and missions assigned to it?
Thank you for this opportunity which allows me to provide you with information on the Inter-African Conference on Insurance Markets (CIMA). This was born of the will of the 14 signatory States of the CIMA Treaty on July 10, 1992 in Yaoundé.
It follows on from the cooperation agreements on the control of companies and insurance operations signed successively in Paris on July 27, 1962 and November 27, 1973.
The objectives of the Conference are to:
– Strengthen cooperation in the field of insurance, by establishing an enlarged and integrated market for the insurance industry, bringing together the conditions for a satisfactory balance from the technical, economic and financial point of view;
– Facilitate the conditions for the development and reorganization of insurance companies and increase the capacity to retain premiums at the national and sub-regional levels;
– Promote the local investment of technical and mathematical provisions generated by insurance operations under the best conditions, for the benefit of the economies of the sub-region.
– Pursue the policy of harmonization and unification of legal and regulatory provisions relating to insurance and reinsurance operations as well as the control of insurance and reinsurance companies;
– Pursue the training policy for insurance executives and technicians for the needs of companies and administrations in the Member States.
These objectives are implemented by the specialized bodies created for this purpose, namely the International Insurance Institute (IIA) and the CICA-RE. The Council of Ministers is naturally the governing body of the Conference. The Regional Control Commission (CRCA) is the regulatory body.
Since July 10, 1992, the date of signature of the CIMA Treaty that you mentioned earlier, what assessment can you make of this institution?
“30 years after its establishment, the assessment of the CIMA initiative is perhaps discreet, but very complimentary. It suffices to be convinced of this to note the significant achievements and the quality of the results recorded. To name a few:
The CIMA Code, which establishes the unique conference regulations, is available, always updated and widely shared. This important compendium of all applicable insurance texts has been in force since 1994.
The imposing and futuristic headquarters of the General Secretariat of CIMA in Libreville, of the International Insurance Institute in Yaoundé and of CICA-RE in Lomé are the fruits of an ingenious system of financing for the first two and of own resources for the third ;
Statistically: more than 200 companies have been approved, of which 176 remain in operation; During the 2020 financial year, the market recorded a turnover of 1,363 billion FCFA. Claims settled for nearly 750 billion FCFA, technical and mathematical provisions valued at 2,276 billion FCFA. Investments represent 2,598 billion FCFA, commissions were paid to intermediaries for 149 billion FCFA and the net operating income stood at 85 billion FCFA.
The rehabilitation of companies and the strengthening of their financial capacity and their solvency is a very serious concern of the Regulator. Today, all companies in operation have the minimum regulatory capital required and more than 80% of companies cover their regulated commitments and have a sufficient solvency margin. For those who are still lagging behind, close monitoring by the Control Commission has been set up to help them meet the standards. More than thirty companies have seen all of their licenses withdrawn.
The rate of claims settlement has improved significantly, although it can still be improved. The levels of investment in savings and in state investment instruments are significant.
On a completely different level, we note a marked improvement in the capacities of managers in terms of quality and quantity. Indeed, the International Insurance Institute delivers every two years an average of 50 executives and senior technicians and more than 300 technical agents on the markets, all holders of either the DESS-A, the MST-A or the DTA. This body, which has just switched to the LMD system, has also just delivered its first batch of ISFA-LYON/IIA co-qualified actuaries
Above all, I note a very harmonious functioning of the system, on the basis agreed and respected by all the States. The CIMA is undoubtedly a brilliant success of regional cooperation.
But much still remains to be done, in particular to take up the challenge of the image and the quality of service and benefits vis-à-vis policyholders and beneficiaries of insurance contracts, so many specific objectives for which the high Council of Ministers maintains all the firmness of its directives.
Technological and financial innovation is driving dematerialized insurance and the introduction of new products and new insurance distribution channels. Have the regulations changed to take this into account?
The world is indeed launched at full speed in innovation, with in particular the dematerialization of a number of economic activities, in particular in services. The insurance industry is no exception to this irreversible evolution. We observe not only the emergence of new products and other operators that are deployed on the margins of traditional systems, but also a marked change in the operating systems of insurance companies. The new methods of distribution by mobile telephony hold great potential and a great deal of hope. In particular, microinsurance, a digital niche par excellence, which aims to meet the needs of people excluded from traditional finance, due to their low level of income, could be the train of the insurance revolution.
All of this is not without risk for users of the financial system as a whole and, beyond that, for the economies of our countries. In the absence of capabilities to monitor flows and movements (premiums collected, claims paid, results recorded, etc.), technological innovation could unfortunately turn into a serious threat for the masses of users.
CIMA is hard at work to regulate digital insurance, which must nevertheless be encouraged. At this stage, it is a question of building a regulation that is sufficiently flexible and integrative of the dynamics, processes, methods and realities of digital technology. A benchmarking approach could make it possible to appropriate the successful experiences of other economic areas. »
How do you assess the impact of Covid-19 on the insurance and reinsurance sector in the CIMA zone market?
It seems wise to me to distinguish between the impact on the core business and the related and indirect impact of the pandemic on the overall insurance sector in the area. With regard to the core business, i.e. services linked to the direct application of contracts, the impact of covid19 has so far remained mixed. There is a certain resilience and even overall growth in the turnover of life and non-life companies (+4.8% in 2020 compared to 2019). This resilience could be explained by the principle of the insurance technique, which excludes coverage of pandemic claims. Indeed, the state of a pandemic, once declared, leads to restrictions on the accessibility of insurance services and generally excludes from the coverage of the contracts, the claims relating thereto.
On the other hand, with regard to the indirect effects of the pandemic, which have affected all parts of the economies of our zone, they are consecutive to the sometimes substantial drop in activity experienced by many insured companies. In the tourism sector, for example, several insured businesses have had to stop their activities.
However, I would like to point out that insurance companies and their associations have taken the wise decision to listen to policyholders and to revise the exclusive coverage clauses of their health insurance contracts. Regulators have, for their part, encouraged companies to formally put in place business continuity plans, to deal with the possibility of a break in the balance of their portfolio as a result of the pandemic.
The perception of insurance is quite negative in the public opinion and CIMA is not visible in the concert of institutions of its rank. What is planned to improve the notoriety of the institution and develop public appeal for insurance?
The insurance sector in the sub-region suffers, rightly or wrongly, from a rather contrasting image among the general public. This state of affairs is based on factors, some of which are intrinsic to the profession and others beyond the control of insurers. Delays in the settlement of claims are not always the result of sibylline maneuvers by insurance companies as conveyed in popular imagery. Very often the insured/victim can be the cause of slippage in payment terms, as well as the other institutions involved in the compensation process (Statements, Experts, etc.).
In any case, the entire Conference system is mobilized to significantly improve the rate of claims settlement and the quality of service to policyholders. Significant progress has been made in this direction. The General Secretariat will continue efforts to ensure that commitments, at the heart of the insurance business, are met in time and in quantity.
With regard to Communication, the interest of a better visibility of the Conference is certain and the benefit of a strong positioning among the major institutions for the supervision of insurance and the financial sector is undeniable. We believe that a review of the communication strategy and a densification of actions allowing a better knowledge of the insurance sector by the public will have to be carried out. The Committee of Experts, the preparatory and advisory body of the Council of Ministers, has just reiterated this when assessing the new organization chart of the General Secretariat submitted for adoption by the High Council of Ministers.
The management team of CIMA has been completely renewed. Is it a dynamic of sanctioning the outgoing team? And what mission is entrusted to the incoming team?
The Chairman of the Committee of Experts, the Chairman of the Regional Control Commission, the Secretary General and the two Deputy Secretaries General were all replaced during the past financial year. But this is by no means any sanctioning action by the previous team. Their terms had simply expired.
The new team is responsible, like the previous one, for implementing the high directives of the 14 States of the Conference which are very clearly enacted in the Treaty establishing an integrated organization of the insurance industry in African States, commonly known as the CIMA TREATY . It will be a question of implementing the strategic vision of the Council of Ministers, namely, to make the Conference “A reference Organization at the service of the development of the insurance industry for the benefit of the African populations and economies, anchored to the best international standards in terms of financial supervision and contributing to regional integration and financial inclusion in the area”.
What is the outlook for the insurance industry in a context marked by an economic crisis linked to the covid19 pandemic?
Most industries have been impacted by the pandemic across the globe. The impact is more or less marked in the insurance sector. But as indicated above, and in view of the statistics, it is more of a slowdown than a crisis, as far as the insurance and reinsurance sector of the CIMA region is concerned.
The resilience of the insurance sector is largely based on the natural prudential approach of insurers. It is now up to them to call on their creativity and potential reserves to protect themselves further. It remains constant that insurers are expected to support all farms and production entities that suffer insured losses.
In general, African insurance must undergo organizational, functional and procedural changes. It cannot lag behind global reference canons and quality and transparency constraints or stay on the sidelines of the great wagon of financial inclusion and dematerialization and its requirements.