Ethiopia's decision to postpone its August 2020 elections indefinitely has raised political temperatures in the country, as both the government and opposition parties accuse each other of attempting a power grab.
Jumpstarting Africa’s insurance through talent and regulation
“Two years ago, we decided that we needed to do a bit more on the continent,” she said. Last year, the company opened an office in Kenya, and in July 2016, it announced the acquisition of Zurich Morocco.
If we are going to invest in a market, it is important that we also invest in the people in that market
Although the company operates in Nigeria, Africa’s second biggest economy, it does not have a subsidiary there. “What determines whether we go into further acquisition or not is which segments or what countries are growing and whether we are already doing business there,” she added.
With an annual turnover of close to €150bn ($168m), Allianz is one of the largest players in the world of insurance. In Africa, Allianz has built on the historical footprint ofAssurance General de France, after acquiring 57.9% of its capital in 1998.
In its long-term vision to be active across the continent, the company has to adapt its operations not only to market demands “but also to what regulators want, especially as we go into Ghana, Kenya and Morocco”.
The company counts 16 subsidiaries across the continent and also delivers international insurance programmes in nearly 30 African countries.
Apart from the ease in replicating models across its historical French-speaking market, doing business in Francophone Africa has been much simpler because the financial and insurance markets in most of those countries fall under Conférence Interafricaine des Marchés d’Assurances (CIMA) regulations. The CIMA zone comprises 14 French-speaking countries in West and Central Africa.
“A recent law passed in the CIMA region demands that 50% of a certain class of business must remain in that region,” Maidou said. A new set of CIMA reforms that came into force in June this year stipulates that every business should be fully insured locally, within the CIMA country where they operate.
In the area of reinsurance, however, the body only allows 50% of a certain type of business to be done outside the CIMA zone – a far cry from the 75% pre-June levels.
Some heavy hitters, including those in aviation, maritime, oil and gas exploration, among others, are allowed to seek 100% reinsurance outside the zone, but only after they have insured their installations locally or within the CIMA zone.
Although this type of intervention through regulation can be an important means to boost the growth of the insurance sector in Africa, “[CIMA’s] move is causing some tension among a few international players, who do not have a flag on the ground,” said Maidou.
Maidou agrees that local content regulation in Nigeria and Kenya, “where they want to make sure that the local insurance market has participated on a certain insurance product before getting insured outside the continent”, is encouraging, especially as some large firms circumvent African insurance companies to place their premiums abroad.
A push for “no premium, no cover” clauses in regulations in a number of countries in recent years [Ghana 2014, Nigeria 2013, Gambia 2016 and Zambia], according to Maidou, has helped reduce the practice of “people asking for insurance coverage that they’ve not paid for, which defeats the whole purpose of the insurance sector. “But while [that clause] is invaluable to us in the insurance sector, regulation is one thing and implementation is another”.
Although regulation and implementation are matters for the government, the insurance sector should make trust one of its top priorities, Maidou said.
She argued that “if there’s an issue with penetration, it is likely because people are wondering whether insurance companies will come to the party and pay the claims when called upon to do so.
“The only way to build trust is delivering on the promise that we make to policyholders: transparency, availability, acceptability and affordability”.
Building trust, she said, also means educating the population about insurance and how it works.
Access to data
Growing its African operations largely means “adapting Allainz’s products to the African context”, explained Maidou. “You cannot expect the same standards that you would get in places like Germany or somewhere else in Europe or the United States. So we have to look at products in the African context quite often.”
Access to data is necessary for an insurance company to decide to absorb another company’s risks.
Maidou complained that the insurance sector across the continent faced “a major issue with data”. The privatisation of Nigeria’s power sector in 2013 “has attracted a lot of insurance companies looking to support it. It calls for a lot of answers from our end, as it is difficult to insure something without access to enough information”.
Africa’s 70% mobile phone penetration rate has simplified data collection over the past decade, although the continental insurance penetration rate sits at only 2%, excluding South Africa’s 14% penetration rate.
“The question is: How do we tap into the vast penetration rates of the mobile phone sector to provide insurance to a wider group of people?” Maidou asked.
“Apart from helping us communicate with more people to help find what exactly it is that they want, mobile phones have opened new avenues like crop insurance – which is one of the key areas we are interested in, mainly because of the vast arable land that is available.”
For Maidou, boosting insurance penetration involves educating local populations and strengthening capacity in terms of local talent. At the helm of the Insurance Institute of South Africa since 2015, Maidou – who is from Burkina Faso – says she is aware of the wide-scale lack of skills facing the insurance sector in Africa.
And in a bid to address this challenge, she has joined other firms to promote a special insurance project led by the African Leadership University’s [African Leadership Group has under its umbrella: AL Academy, AL University, AL Network, Africa Advisory Group] Fred Swaniker.
The Mauritius-based African Leadership University, a recent addition to the Africa Leadership Group, opened its doors to students from across the continent in March 2016. Graça Machel, wife of the late Nelson Mandela and member of The Elders – serves as the university’s chancellor.
“Although we are competitors in the same market, we have one common goal,” Maidou said. “That’s the only way for us to make insurance more sustainable and also make sure Africans lead the African insurance market in the long run.”
The top management at Allianz Africa’s headquarters in South Africa is 90% African, while its top management around the continent has 70% local representation.
“When I started here [in South Africa], the management team consisted of about 17 people, of which six were expatriates,” she added. “Now, we are down to one non-African expat. As people leave, we hire Africans to replace them.
“If we are going to invest in a market, it is important that we also invest in the people in that market.”