Procurement News Notice |
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| PNN | 4118 |
| Work Detail | Failure to observe prudential norms by insurance firms, coupled with unfair competition, continue to affect Rwanda’s insurance growth, the central bank says. Although the sector continued to register considerable growth in terms of total assets and capitalization, National Bank of Rwanda (BNR) observed that the reluctance by most market players to pay attention to prudential norms such as solvency and liquidity ratios, coupled with unhealthy competition, affected the industry’s performance during the first half of 2016. According to John Rwangombwa, the central bank governor, unfair competition stemming from price undercutting, operational inefficiency, inadmissible insurance receivables, weak governance and a general lack of innovation continue to hurt the industry despite progress made so far. “To improve performance of private insurers, BNR will continue to engage with the sector and ensure that insurers observe the prudential norms,” Rwangombwa noted, while presenting the Monetary Policy and Financial Stability statement in Kigali last week. According to the governor, the country’s insurance sector remains sound and well capitalized. The sector’s total assets increased by 11.6% from Rwf295 billion to Rwf329 billion over the past 12 months. Similarly, the industry’s total capital improved by 9% from Rwf218 billion to Rwf238 billion in the period under review. Equally, the total written premium (total premiums on policies issued by the insurer during a specific period of time) increased by 16%, from Rwf47 billion Rwf55 billion. However, sector experts believe this performance could have been much better had the players been innovative enough. The experts argue that insurance firms need to develop products tailored to customer needs to be able to increase uptake levels in the county. For example, Rwanda’s insurance uptake has stagnated at just 2 per cent, forcing sectors players and partners to find ways of encouraging Rwandans to increase consumption of the available products. And for experts like Jean Pierre Majoro, the Association of Insurance Companies in Rwanda executive secretary, the sector can only improve if players invest in skills and innovation. In a recent interview with The New Times, Majoro said the penetration rate in the informal sector of the economy is still low “because sector players have not yet come up with innovative and suitable products targeting the sector. James Norman, the KPMG head of insurance in East Africa, recently told this publication that many of the products being offered by the market do not meet customer demand, noting that few people will buy them, a situation that translates into low levels of penetration in Rwanda and the region. According to John Bugunya, the chairman Rwanda Insurers Association, the potential to improve is there and industry players must seize the opportunity and become innovative enough but also encourage fair competition. Pension sector performance Meanwhile, Rwanda’s pension sector’s assets, grew from Rwf529 billion to Rwf567 billion registering a growth of 7% between June 2015 and June 2016. This increase in assets is mainly attributed to additional investments made from pension contributions that increased from Rwf61 billion to Rwf68 billion. The increase in contributions is related to the number of contributing employees which increased from 397,664 to 398,987 in June 2016. Overall, Rwanda’s insurance sector is currently composed of 13 private insurers, 2 public insurers, 15 loss- adjusters, 15 insurance brokers and 385 insurance agents. The pension sub-sector on the other hand is comprised of 1 public pension scheme and 63 private pension schemes. |
| Country | Rwanda , Eastern Africa |
| Industry | Financial Services |
| Entry Date | 03 Sep 2016 |
| Source | http://www.newtimes.co.rw/section/article/2016-08-31/203107/ |
