Rwanda’s insurance sector is expected to grow by15 percent compared to 30 percent in 2008 as real economic growth is projected at 5.8 percent.
Corneille Karekezi, the President of the Association of Insurance Companies in Rwanda, said the 15 percentage point contraction in the sector is due to the decline in some sectors of the economy.
Karekezi made the revelation at the All-Africa Insurance and Financial Services Summit 2009 at Kigali Serena hotel yesterday.
The two day summit, which attracted close to 100 insurers, aims at enhancing growth and development for Africa’s insurance sector.
“Economic growth has been the prime driver of growth in insurance coverage and premiums,” Karekezi said in a separate interview with The New Times.
Last year Rwanda’s economy grew by 11.2 percent but as a result of the global financial crisis the government projects GDP growth will drop to 5.8 percent this year.
“We are still enjoying a momentum growth; it would have been higher if the construction industry was not slowing down. As insurers, we don’t have the same business like last year,” Karekezi said.
With only eight insurance companies and six insurance brokers, Rwanda’s insurance penetration is low at one percent of the share of the GDP.
Meanwhile, Désiré Vencatachellum, Lead Economist of the African Development Bank, said the global financial crisis was taking its toll on the Africa insurance sector.
The AfDB official said the economy of the biggest and most developed insurance market like South Africa, is officially in recession, lowering supply of life and non-life insurance due to increased cost of capital for insurance firms.
Vencatachellum said the biggest challenge is limited data available for few countries, which reflects low penetration overall.
The bank said it has set up an emergency liquidity facility of $1.5 billion to support AfDB eligible countries and non-sovereign operations in Regional Member Countries (RMCs) that are suffering from lack of liquidity due to the global financial crisis. He said that an extra trade financing facility of $1 billion to support trade finance operations had been set up.
Francois Kanimba, the Governor of the National Bank of Rwanda said the global financial crisis had led to a decrease in demand for insurance services and capital available for insuring risks on international markets.
According to the governor, the crisis has made it difficult to renew treaties related to insurance as well as leading to higher premiums for re-insurance.
With the exception of Gabon, South Africa and Lesotho, the insurance penetration in Africa is said to be consistently below five percent of GDP.
Kanimba said low income among the African population and large reliance on compulsory-based insurance like motor vehicle insurance and credit life policies has kept Africa share in global insurance market at 1.69 percent.