The current regulatory differences among insurance markets across Africa has been described as major obstacle to further integration of Africa re/insurance markets.
This formed part of the survey results conducted by African Insurance Organisation published by African Insurance Pulse AIP, where almost all respondents agree that current regulatory differences “are a major barrier to further integration of the African re/insurance markets.”
Buttressing this, the survey result showed that out of 28 respondents, 26 agreed that regulatory differences were deflating the balloon to lift harmonisation under African Continental Free Trade Area (AfCFTA). It was noted that apart from Conference Interafricaine des Marches d’Assurances CIMA, no other region has attempted to harmonise regulation.
This continental mixed regulatory jabs create challenges for insurers and reinsurers that want to venture to other markets within regions and across regions. AIP flips open the challenge, “As a result, regionally active insurers, reinsurers and intermediaries in Africa must deal with many insurance regulatory frameworks at different stages of development and apply different solvency regimes, capitalisation levels and make regional expansion difficult as well as costly.”
The two executives that were opposed to the view of the 26 stated that the issue had been recognised by regional economic communities RECs which are working towards harmonisation of regulations, and therefore, were of the opinion that the melting of the regulatory iceberg was due. AIO not agreeing less stated that REC and African Union are ‘essential partners’ in promoting development and integration in Africa.
Going forward, all interview partners agree that harmonisation of regulation could become the basis for African insurance development success, where level playing field could be achieved by agreeing on a handful of parameters such as capital requirement, taxation and uniform decision on physical presence.
Other positive effects of harmonisation of regulation they firmed up are, low cost of doing business, increased competitiveness and, significantly reduced regulatory risk for companies active in different African countries.