The covid-19 pandemic has disrupted economies and communities around the world. Varying from basic social customs and working arrangements to how people currently live. Like other sectors, the insurance industry is no exception. Experts predict that the impact will be significant although no official figure has been put to it. In an exclusive interview with Doing Business, Jean Paul Nkusi, Technical Director at the Rwanda Insurers Association, (ASSAR) said that insurers are now confronting a new environment, describing it as an era of ‘short and long’ term disruption. For an industry that is still nascent compared to the rest of the region, Nkusi noted that Covid-19 is likely to act as an accelerant to significant trends including digitization According to him, insurers are affected proportionally to the businesses that are halted. “Key sectors like transport have been halted. This largely affects the companies because participation will definitely decrease. You cannot get a new client in such times, and we have seen that. In other words, the more a certain business is affected, the same will happen for the insurer,” he said. Nkusi also revealed that majority of the clients have consistently declined to pay their premiums, “They attribute that to Covid-19,” he said. “This doesn’t remove the fact that some clients have resumed working, but you will find a company insuring two taxis, from a previous ten taxis,” he said. Official data from the Access to Finance Rwanda indicates that insurers’ faced difficulties with working remotely during last year’s lockdown. A total of 41 per cent of insurer and 43 per cent of brokers said they had difficulty working remotely. Insurers were unable to conduct aspects of the insurance product cycle remotely at the start of the lockdown and a substantial proportion were still struggling to process and pay claims remotely at the time of the survey. “The Covid-19 pandemic, therefore, has had impacts on insurers’ ability to launch new products, conclude sales, collect premiums, service customer and process and pay claims. At the same time, the pandemic is impacting insurers’ balance sheets as investment returns are negatively affected by the ensuing economic crisis triggered by Covid-19,”the survey noted. Better outlook for 2021 According to Access to Finance Rwanda, 70 per cent of insurers expect premium income to recover by 2021, although brokers are less ‘optimistic’. “The economic crisis and ensuing widespread reduction in the income of clients, however, makes the recovery time uncertain and likely longer than insurers are expecting,” reads part of the study. According to Nkusi, the pandemic has certainly highlighted weaknesses in the sector, bringing with it certain challenges. However, he also observed that the pandemic also provides opportunities for the insurance sector and regulator to drive insurance market development. “Insurers should be optimistic and not lose sight of long-term (durable) imperatives, much as they concentrate on dealing with current customer needs, maintaining solvency and ensuring operational resilience. The pandemic has also shown us that this is a sector that can be digitized,” Nkusi said.
