Training and up-skilling the insurance industry across Africa remains a top priority as the industry reshapes itself to remain relevant and valued.
Speaking exclusively to Commercial Risk Africa at the 44th African Insurance Organisation general assembly in Kampala last week, Bernd Kohn, chief executive Middle East/Africa at Munich Re, discussed the challenges of the insurance sector in many African countries.
Looking at the move towards local retention, he said: “They usually don’t have the capacity, financial muscle or the expertise to carry all the risks.”
But he stressed that it is the right thing to do to involve the local industry “so they get a piece of the cake”. Mr Kohn also believes local involvement does help raise the level of expertise locally.
Munich Re has a long history of providing training to the market, both locally and in Germany at an international level. Many of those programmes continue, the Munich Re team said, citing a recent programme in Nairobi looking at risk-based solvency.
Last year the company closed down its Mauritius office, moving the business to Johannesburg. Rather from being a negative move, Nico Conradie, CEO of Munich Re Africa, said clients report now receiving a better service and he is confident that centralising operations in Johannesburg will have long-term benefits for the company and its clients.
Mr Kohn also emphasised the new opportunity to centralise expertise and deliver for clients. “With a smaller office, you cannot have enough people with the right depth of expertise. But now we can have those dedicated experts based in Johannesburg serving a wider region.
Being able to serve the whole community from a generalist office is no longer an option, he explained. “This is simply no longer the world we live in,” Mr Kohn said.
“You need that specialist knowledge to select the right risk, assess the exposure and provide a service to the market.”
Mr Kohn said that in an environment in which well priced and good quality capital is easily available, it is knowhow that sets companies apart.
Because of its role in providing training for so many years, Mr Kohn said he knows there are plenty of good people operating in the insurance sector across Africa and that certainly helps when they bring risks to the table.
That drive for quality and well trained staff is unlikely to go away, he said, in a continent where the regulators are increasingly looking to the US and Europe for the appropriate standards. But he cautioned against rushing towards regulation.
In South Africa, he said, it has taken some 15-20 years to reach the point it has achieved on the SAM regulations. “We can’t expect Kenya, say, to go faster,” he said, “but I think the principle behind it will not go away. In the long term it is a help to have robust local insurers.”
Overall, both men are optimistic about the continent’s future, believing the economic woes have caused a slight hiatus in development but is unlikely to mean the end of development. “There is still an appetite to write business on the continent,” said Mr Conradie. “Smaller countries are going through a period of reorganisation, diversifying their economies.”
Mr Kohn also acknowledged that, as more developed markets see movement in interest rates, appetite to take risk in emerging markets does diminish. “Returns in Europe become more attractive and the risk appetite reduces,” he said, “but that is a cyclical thing. It is happening here in Africa now but if you take a mid- to long-term view, the appetite is there.”