Mr. Hippolyte Oyouba is the Deputy Managing Director, CICA-RE, an international reinsurance company jointly owned by the West African Development Bank and 12 Francophone African countries, among others. In this interview with NIKE POPOOLA, he speaks about why foreign interest is growing in Nigeria’s insurance sector
Why is there a renewed interest in Nigerian insurance sector by foreign investors?
Nigeria is the fasted growing economy in Africa and if you want to continue to develop this economy, you need insurance and insurance needs reinsurance. That is why we must be there because all countries developing need to have reinsurance. The risks in this market are very big and we need capacity to provide cover for the market and this can be provided only by those who are in the market to cover those kind of risks like oil and gas which is in billions of US dollars. We have to complete the capacity for this market. Nigeria is a big country and is very important for us because Nigeria needs some capacity from us like the insurance companies. We have the mission to develop our countries and economies in Africa. That is why we are here. CICA-RE had been planted in Nigerian market many years ago and we have to complete the support to this market by organising seminars to interact with our partners here and the main purpose is to take the opportunity to gather the technical staff of the various insurance companies, discuss with them and to make it possible to expand the portfolio we have in this market.
What challenge is facing the African market?
Insurance has a low rate of penetration in the economy. It is a big problem because we cannot be developed if insurance cannot fully give cover to other industries. If we have a great loss, we need somebody else to pay for us because if we don’t have somebody to pay when we lose money, we cannot develop ourselves. Insurance and reinsurance develop the country. The challenge now is for Africa to retain more money in the economy. Reinsurance is mainly written abroad and if you have to reinsure abroad you send money abroad and you cannot develop that way if all monies keep going abroad. It is necessary to have African reinsurance and reinsurers locally to retain more risks. We have realised that there is low penetration in the market but there is growth in the investment made by insurance and reinsurance companies into the banks, a lot of funds of insurance and reinsurance firms are lodged in the banks in Africa to participate in the development of the continent in terms of business.
What areas have to be developed in insurance that have not been looked into?
They are risks like agriculture; though it is the most important part of the population, this path has to be developed. There are small risks like accident, but we will see that no where in Africa is it well developed, everyone will need this cover. I’m not wishing it (accident) on anyone, but if you don’t have any insurance, there will not be compensation (if it happens). There are small risks, but if you compare them to the population, they will amount to very big premium income for the insurance sector. However, till now, it is not developed. We have identified some areas and we are in conjunction with some other reinsurers in the Africa Insurance Organisation and we had discussions on those things. There is the Africa catastrophe risk that was set up for agriculture to see how the natural risks in Africa are borne and to tailor the price and risks in Africa and to boost them.
What is your contribution to developing the African market?
We are an international organisation; we have already done a lot with the CIMA countries in the francophone zone mainly in West and Central Africa. We have already done a lot in this country. We need to also develop out of this CIMA zone like in west Anglophone, East, South Africa and North Africa to Asia, middle east. We can keep more capacity to add with the capacity of other reinsurance that are already in Nigeria. We have businesses from Nigeria that come through the brokers and everywhere from the world. It goes first, maybe to Asia but it comes back to Africa, to us. Why not have it directly in Nigeria? That is why we need to be present here.
What steps have you taken in CICA-RE to expand your operations?
We have taken steps to expand beyond the 12 states we call CIMA. We are in Nairobi now and we opened a contact office in East African market. We are coming close to give more capacity to make clauses to help companies to build up technical account, to have human resource competence, to build up the wording because we have the experience of a leader of the reinsurance programme. We have human resource to assess the risks and to visit the risks and quote the risks for direct companies. We are targeting before the end of this year we hope to be in Tunisia in North Africa, that is the support we are trying to give to the African market, from the north to the east. We are not yet in South Africa.
What is your plan for West African market?
We are strong in the francophone countries and we will start doing the same in the Anglophone countries. What we are focusing on is to let the staff of the direct companies better their accounts. We go to the CIMA regions and sit with the technical accountants to help them to build programmes. You are coming to meet with those from the ground to the top level of management at the conferences and we discuss issues regarding our market.
Is it necessary for African reinsurers to consider developing cover for emerging threats in the continent like terrorism?
It is necessary because there is a move now. In the past, it was not a reality of our market. Since what happened in Nairobi, Kenya that is an initial issue and it started in this market. There is a terrorist policy. We buy the cover for our CIMA direct companies and out of CIMA also, Anglophone countries. We bought a terrorist capacity for our business. That is an urgent issue now. In the past it was not so.
How can risks from Juicy businesses be retained by African reinsurers?
There are a number of decisions made on it. We have the African aviation pool which is here to keep the additional premium here. We have the oil and gas pool also which is on the ground. We, CICA-RE bought capacity for oil and gas also basically from Africa to help our cedents. We call our direct companies cedents to write more businesses. But you know the problem in our job is that the risks are so important that the insurance company can never say I will be covering all those risks. And the most important thing is they have to split it and the most important idea is that each one will participate. Not getting aside and giving all to London market. We have to take some parts of those risks. We need to cover up to 50 or 80 per cent. We cannot cover everything by ourselves in Africa but we must give some parts to European or American or Asian reinsurers. But we must start now to have our capacity progressing. It is the same thing when we write business from Asia, Latin America. They are splitting their risks and they take a part of those risks and part of their risks is covered by CICA-RE and other reinsurance companies in Africa. But I agree that we African reinsurers have to take more and more on those business.
Do you intend to continue training programmes in Nigeria?
We have an annual programme and we need to be closer and the market has to be sustained. We have done the maiden training programme in Nigeria for the insurance companies. This market is very important to CICA-RE. We are talking of Africa’s biggest economy. There is a report that in 2050, Nigeria would become the third largest population in the world and be among the top nine economies if, of course, certain things are sustained. It makes good sense to also be interested in the market, so it is something that has to be sustained and CICA-RE had been involved in capacity building not just for the market, it is something that is ongoing and we will pay more attention to the Anglophone countries in Africa. What we do is to first develop our portfolio of business, for example, from Nigeria. If we have a big portfolio we can open a branch to develop the portfolio because if we don’t have sufficient it is more expensive to open a branch and start like this.
What should be expected from African insurance market in the next five years?
All African insurers, mainly francophone, are involved in this organisation that makes a good study for the future of insurance in Africa. There is a new trend in terms of growth in Africa, the growth of business, and we have seen that it will continue in the forthcoming years. What we have noticed is that despite the prices in West African countries, the various markets are making profit and that trend will be continued due to the support. There is no insurance without reinsurance; it is due to the support of the reinsurance. We will keep supporting in terms of capacity to keep the trend. Africa will be growing and CICA-RE is also in that trend.
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