Hope Murera: Africa’s insurance industry

Africa’s insurance industry need fewer players to offer better services-Zep Re CEO Hope Murera

It is six months since Hope Murera was appointed the chief executive officer of the Nairobi based-Zep Re (PTA Reinsurance Company) that  is charged with the task of promoting trade, development and integration within the  Common Market for Eastern and Southern Africa  region through trade of insurance and reinsurance business. She spoke to The Independent’s Isaac Khisa about the opportunities of Africa’s reinsurance business in Africa.

What is driving you open offices in Uganda and Ethiopia?

Uganda is one of our founding members and has always been a good supporter of Zep Re. It was legislated in the Uganda Insurance Act that we get 10% of the compulsory cessions way back in the 1990’s which was very supportive as a new company. We are shareholder of Uganda Re and support the Ugandan insurance market with training and reinsurance services. Our setting up offices in these countries is to ensure that our services are closer to the clients as the market grows and demand gets sophisticated. We are now talking about the discovery of oil and gas and the emergence of new risks such as cyber risks, political risks, and we want to be on the ground to share the experiences and know the needs of the local insurance industry more closely. We already have other regional offices in Douala, Cameroon; Harare, Zimbabwe; Lusaka, Zambia; Abidjan, Cote D’Ivoire; and a Retakaful Window in Khartoum, Sudan.

What is your assessment of reinsurance business on the African continent?

Reinsurance business is growing in Africa. Traditionally, it was something played by the west as many of the reinsurance services were offered my multinational companies headquartered in London or Munich. But in the past years, we have seen the growth of African reinsurance companies ranging from those serving specific regions to those serving the entire continent. We have seen governments setting up national reinsurance companies like the Uganda Re in Uganda, Tan Re in Tanzania, and Kenya Re in Kenya. And these are companies that we have given support. One of our founding objective is to bring to live local insurance and re-insurance companies. So there’s an improvement and there’s still a long way to go because more than 50% of reinsurance premiums still go out of the continent.  One of the things that we need to do is to grow capacity. We need to be heavily capitalised and where there’s disjointed effort, we need to bring that together and keep more and more money on the continent.

A number of countries are currently setting up their own reinsurance companies.  Does that worry you?

No. We have actually been partners with them. We started Tan Re- through a management contract, put in share capital and we have done more the same with the Uganda Re and WAICA Re in West Africa. We have therefore chosen to be partners. For instance, Uganda Re, is our biggest client in Uganda and so are the other players in other countries.

How are you dealing the challenge of currency devaluation on the continent?

It is really a big issue and it is connected to a drop in commodity prices and over dependence on oil exports. However, we see African economies being resilient and we do hope that they will diversify their products for export and put in place strong micro-economic policies to stabilize those currencies.

Why do you think insurance penetration in Africa has remained very low amidst the huge opportunities?

The reasons for low insurance penetration ranges from cultural to financial capability to distribution channels. There’s need to have distribution channels that are not too costly otherwise insurance premiums won’t be affordable to the majority of the population. Luckily, micro-insurance products are picking up and we are trying to share experiences as the industry to find ways and means of getting the right product and distribution channels to consumers. Penetration of mobile telephone is a very interesting trend and we hope that will drive high insurance penetration. But again where penetration is high like South Africa or the west, it was also driven largely by legislation. So we are engaging with the regulators and the governments to ensure that some of the most critical insurance policies are legislated or facilitated. For example, there’s need to encourage people to take up life insurance space by giving them incentives around tax.  We hope this will encourage more people will take up insurance in the coming years as economies and standards of living improves.

What opportunities do you see in Africa’s insurance industry?

The opportunities are huge. These are growing economies and we still believe that Africa is still the next frontier for growth of reinsurance business. If you look at Ethiopia, the economy is growing at 7-8% while east African economies are growing at 5-6%. These are very encouraging growth trends and we believe that it is going to be even better and this does well for insurance industry. But we need to clean our houses; we need to grow stronger institutions. In some countries, you see 40-50 insurance companies yet the market is very small. I am of the opinion that instead of growing small entities that are not strong enough to underwrite bigger risks, there are opportunities for mergers and partnership so that we create few stronger institutions to tap into the opportunities or else somebody else will do that.

You are now marking 25- years of existence. What can you point out as some of the biggest achievements registered so far?

We are proud that Zep Re has become a renowned name in the industry. We are very trusted and have been able to attract very good shareholders such as the government of Rwanda, Statewide Insurance Company, Lion Assurance Company Limited, among others. We are one of the best rated reinsurance company in Africa, rated B++ by the International Credit Rating Agency, A.M. Best.

We have been able to put funds into various economies; government bonds in Kenya, Uganda, and many other regional infrastructural projects. We are possibly the only reinsurance company that has a full department in charge of training, which recently grew to become Zep Re academy, offering courses that are certified. In terms of business, we have been growing at 25% per annum. We are underwriting premiums of around US$130million per annum across Africa, Indian subcontinent, Nepal, Maldives and the Middle East.  We made a profit of US$19million last year and declared a dividend of US4.5million to the shareholders.

What strategies are you putting in place so ensure further growth of the company?

We are planning to have a US$1billion company in 10 years. We plan to achieve this by coming closer to our clients with setting up offices in various countries and making sure that we have access to the business. We have also put in place other strategies and includes; improved risked management, improved relationship management, and we are moving toward raising more capital to ensure that were are heavily capitalised.

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