Central bank is counting on a financial literacy campaign set to commence next year, to boost insurance penetration above the current 2.3 per cent of Gross Domestic Product.
The central bank’s forecasts suggest that the insurance industry is poised for growth, in line with the improving macroeconomic development and prospects.
The industry’s share to GDP is far less than 10 per cent, which the central bank had targeted for by 2010.
With the exclusion of “Mutuelle de Santé”, (a government health insurance scheme), total gross premiums in the insurance industry stood at Rwf64.8b as of June, with total assets of Rwf151.8b.
“As the insurance regulator, we are trying to put a conducive environment for better business and more efforts must be made by insurance companies to promote knowledge of insurance,” Joy Ntare, the Director of non-bank financial institutions at the central bank said in an email interview.
Although the central bank has improved the industry’s regulatory environment through proper laws, including the insurance contract law, liquidation and dissolution, as well as mergers, the lack of public awareness accounts for low penetration rates, hence hampering its growth.
The central bank also established a dedicated insurance regulation on market conduct and good business ethics in the insurance sector to increase market confidence.
“The mandate for the National Bank of Rwanda is to protect the interest of insurance policyholders and other beneficiaries by ensuring that all insurance companies are financially sound and stable and this is done through regular supervision and monitoring,” Ntare said.
“We believe insurers are in a better position to answer this question of low penetration rate.”
Rwandan insurance sector is split into two major categories, public insurers that offer medical insurance and private insurers covering non life and life insurance businesses.
The industry consists of eight players with six of them private insurers while two are public, a figure that increased from five in 2005. The industry has 126 insurance agents.
“We have our input and insurance companies will be part of the campaign, to educate the public on how to reduce the risks of accidents especially road accidents among primary pupils,” said Bernardin Kubwimana, the Executive Secretary of the Insurers Association.
Insurance companies are also expected to educate the public on various insurance products, get their views on how claims should be paid and how rural community can be catered for.