Stakeholders present at the recently-concluded West Africa Insurance Companies Association (WAICA) Education Conference in Lagos have urged insurance companies in the five English-speaking West African countries (Nigeria, Ghana, Gambia, Sierra Leone and Liberia) to integrate the sub-regional insurance industry.
Integration of insurance companies in the West African sub-region will contribute significantly to the GDP of the five countries and aid competition with counterparts in other markets, WAICA stakeholders said.
According to them, integration becomes crucial for insurance industries like other key drivers of the economies in the sub-regional finance market, as it aims to build capacity in line with the Economic Community of West African States (ECOWAS) integration project in West Africa.
While speaking at the conference, Director (Inspectorate), National Insurance Commission (NAICOM), Barineka Thompson, who was represented Nigeria’s Commissioner for Insurance, Mr Fola Daniel said that integration and harmonisation of West African insurance industries would help improve regulatory and supervisory bodies, insulate insurance institutions from domestic excesses, harmonise regional laws and institutions and create opportunities for learning by doing.
Integration requires the elimination of barriers to cross-border investments and differential treatment of foreign investors within the region and extends to harmonisation of legislations, policies and institutions, Daniel said, adding that similar efforts to integrate both the banking and stock market sectors in the sub-region have been successful.
The Commissioner however noted that while other sub-sectors in the sub-regional finance market have integrated their operations significantly, the insurance industry is still a third-level player in the sub-regional financial services sector.
Thompson affirmed that some of the challenges faced on integration include inadequate and poor regional infrastructure, weak institutions, lack of human capacity, and diversity across economies, divergent country attitudes towards regional integration as well as insecurity and political instability.
To address the problem on integration and harmonising the markets, He said sub-regional operators need to address the issues bordering on low level of financial literacy, lack of adequate awareness of insurance mechanism, poor perception of the industry as well as issue of regulation, supervision and enforcement, market conduct, self-regulation and pricing among other problems plaguing the market.
He urged insurance companies in West Africa to key into the opportunity created by the forum by developing products and services needed to build underwriting capacity that will accommodate big risks and halt the issue of capital flight, particularly in the oil and gas industry.
“The availability of abundant natural resources and a growing population of the middle and upper class of the society, offers opportunities for insurance business. Likewise, the political commitment at the highest government level also holds the prospect for heightened infrastructure development and trade expansion efforts in the sub-region.
“This will no doubt support, protect and assist the attainment of the goals of West African Monetary Zone (WAMZ). Therefore, the need for integration and harmonisation of the insurance industry in the WAICA member states is no longer an option but an imperative,” Thompson posits.
Meanwhile, WAICA Re Managing Director, Abiola Ekundayo, said collaboration among insurance regulators, expansion of the operations of WAICA Re to serve as a strong sub-regional reinsurance company, opening up of insurance markets in member nations such that regional insurance companies can be established to benefit from cost savings due to economies of scale as the case in the French-speaking countries, and harmonisation of insurance regulation in West African States and the promotion of cross learning and knowledge codification are areas that should be tackled.
The way forward is that the insurance commissions/regulators should define the framework and harmonise the insurance laws and practice of the sub-region; promote a platform for following up and controlling the insurance industry in the sub-region as well as give counsel on all insurance projects in the sub region, Ekundayo concluded.
