Rwanda’s insurance sector is now stronger despite penetration being low, an official has said.
The latest available data for annual insurance premiums and assets also shows that it has great potential for growth.
“Premiums are set to rise sharply especially on property with mandatory cover like cars and competition also likely to stiffen,” said Joy Ntare Director of Non Banking financial institution.
In an exclusive interview with Business Times, Ntare said that in the year 2000 the sector had only two insurance companies with total assets of Rwf 12.25 billion and gross premiums of Rwf3.1b which increased to Rwf80.1 billion and Rwf39.5 billion in 2008. Insurance sector contributes 1.8 percent to the national Gross Domestic Product (GDP).
Insurance market is shared between private and public contributing Rwf40.8 billion and Rwf39.3 billion respectively.
The sector has given birth to a more competitive environment as compared to the past, driven by many players who increased from two in 2000 to eight in 2008.
Due to physical increase of more people owning vehicles, a home, insuring them is expected to boost premiums especially with cars cover.
“If you look on the market, property or commercial building insurance, we are not sure whether premiums will rise at all because it’s optional to have them covered,” she clarified.
She believes that the sector’s performance is competitive enough to attract investors to venture into the Rwandan insurance market because products are not exploited.
Insurers and investors are urged to exploit the competitive and unexploited insurance sector, because even the existing companies are competing on few products.
“The sector is still very much open for business in a way that we still trade between five and six products, yet other insurers have an endless list of products even the ones we have there is a room for improvement in re-packaging, re-marketing,” Ntare urged.
The sector has also not been affected by the global financial crisis.
“They never reported any layoffs, they were able to meet their obligations, no closure and if it was affected it had insignificant impact on the market and just a temporary phenomenon,” she said.
Government through the Central Bank is regulating insurance companies to assure that companies operating are financially sound, so that they have the financial ability to meet their obligations to pay claims.
Ntare said that they deal with the conduct of insurance business, to ensure fairness in the way companies deal with applicants for insurance and policyholder.
Other duties of a department of non financial institutions include reviewing and approving insurance products. The regulation is targeted to be complete by March this year.