The shortage of skilled people and lack of public awareness are some of the major challenges that are undermining the growth of Rwanda’s insurance sector, according to the Central Bank.
The National Bank of Rwanda (BNR), says that its recent financial and management audit of the insurance sector recommends continuous capacity building at all levels.
François Kanimba, Governor of the Central Bank said that major findings of the audit range from non separation of short and long term insurance business, capital inadequacy and improper valuation of assets and liabilities to corporate governance issues.
“Mixing both insurance businesses is a serious risk because others may be making profits that cover the other business that is making a loss,” Kanimba said recently while presenting the Monetary Policy and Financial Stability statement.
Joy Ntare, Central Bank’s Director of Non Bank Financial Institutions told Business Times that lack of qualified insurance personnel is a general problem. “It’s a constraint on the industry’s growth” Ntare said on phone yesterday.
She also said that the lack of public awareness about insurance business contributes to the sectors low penetration rate that currently stands at 4 percent.
The official said that lack of public awareness is attributed to the limited marketing by insurers and low level of insurance literacy among the public.
“Awareness is vital; if people are aware of the risks involved, they may decide to cut unnecessary spending and spend on insurance,” assured.
There are eight players in the Rwandan insurance industry of which four offer both general or ‘non-life’ insurance and life or ‘long-term’ businesses.
One industry player is solely non- life insurance and three are exclusively medical.
The regulator and insurance firms have upped efforts to promote knowledge of insurance, especially in areas of increasing insurance products as well as attracting more players in the industry. Insurance sector contributes 1.8 percent to the national Gross Domestic Product (GDP).