Rwanda Insurers Association (ASSAR) earlier this month received new leadership, including the chairperson of the board Annie Nibishaka, who’s also the Managing Director of UAP Insurance Rwanda.

The new leadership comes at a time the insurance sector is undergoing several reforms that have seen the sector register significant growth in the past two to three years.

As Daniel Muhimuzi Mugisha, the Association’s treasurer says, "The sector has significantly grown following the implementation of new regulatory reforms initiated by the Central Bank (BNR), improved management of insurers as well as strong cooperation between ASSAR Members.”

"There have been a number of new regulations that have helped modernization and adoption of the new insurance law,” he says.

In 2018, the National Bank of Rwanda raised the minimum capital requirements for insurance firms – the amount of money insurers are required to hold with the central bank.

Under the arrangement, general insurers were expected to raise Rwf3 billion while life insurance firms were expected to have a minimum capital of Rwf2 billion, up from Rwf1 billion.

Staff members of different insurance companies after they completed their training at ASSAR Training Centre. They formed the first cohort of the college. Photo: Courtesy.

The decision, which took effect last year in January, was aimed to align the operations of insurance firms with market conditions.

"Over the years, the sector has attracted different players including new foreign investors that have brought in foreign capital, technical skills and business models”, the Managing Director of Mayfair Insurance Rwanda, a subsidiary of Mayfair Insurance in Kenya, says.

The growth

There has been more than $4 billion injection, and that facilitated 11 per cent growth in capital and increased insurance companies’ prospects to generate more revenues.

The sector growth has been driven mainly by motor and medical insurance, "We have seen a split of composites, which was also required by the regulator, and has been positive for growth of life insurance segment.”

Between 2014 and 2017, life insurance grew at 17 per cent while non-life insurance grew at only 9 per cent.

"Life insurance has proved to perform better following the split, as it has been given improved management attention under the real structure,” Mugisha notes.

In advanced markets like South Africa, life insurance plays a key role in driving the fortunes of the insurance sector. Rwanda believes it could leverage the same segment to promote the industry.

"This is a very promising venue for future business opportunities,” he says.

The insurance sector is currently composed of multiple general and life firms, one mandatory and occupational hazards scheme (RSSB), which accounts for 95 per cent of the pension total assets, as well as 12 licensed private pension schemes.

The sector retained earnings worth Rwf46.6 billion in 2019 from premiums and other interest generating activities, thanks particularly to the increased assets of insurance firms.

Assets grew by 13 per cent to Rwf509.7 billion in December 2019.

Despite that growth, however, overall volume remains small.

A special report published in August last year by the World Bank painted a grim picture for the insurance industry, partly pointing to the unhealthy competition between insurers who sell a small number of traditional products.

According to the report, insurers were battling each other, often engaging in irrational price‐cutting and other behaviors, to sell the few traditional products to the same customer segment.

The new leaders are now tasked to correct past mistakes and position the industry on a positive trajectory.

Coming of age

Denise Rwakayija, who was recently appointed to the Association as the Executive Secretary, says that Rwanda’s insurance sector has come of age.

"Before 1994 Genocide against the Tutsi, we had only 2 insurance companies – SONARWA and SORAS. We have grown from two companies to 12 firms,” she says of the growth of the industry.

Still, she insists that the journey is just getting started considering the number of people who are not insured in Rwanda.

The insurance penetration rate currently stands at 1.7 per cent. "Our ambition is to at least be above 2.7 per cent rate in the next two to three years.”

The Association is now pursuing a number of actions that will drive value in the sector and diversify the product portfolio, with core focus being on Innovation, consumer education, capacity building, and market development.

Consumer education, advocacy and mass sensitization is one of those actions and Rwakayija says they believe there's a critical need to put emphasis on education.

"Looking at consumer psyche, people will make decisions after getting information. Education will contribute to mindset shift. Once we are able to educate our masses about the essence of insurance for business and security for lives, people will be able to respond,” she argues.

‘Demand creation is brought about by knowledge. Once people know, they become conscious and once they are conscious, they make informed decisions, consumers are then able to perceive insurance cover as a necessity instead of a secondary option ” she adds.

On aspect of developing technical skills to strengthen the sector, the Association has adopted a mechanism of a holistic capacity building approach which is the Training of Trainers (ToT) strategy, where the trainers selected will be from the local industry to ensure a degree of sustainability and good value for money. This was made possible through the setup of training center in partnership with Kenya Insurance College.