Insurance companies in the five English-speaking West African countries have been asked to use the platform created by the West African Monetary Zone (WAMZ) to integrate the sub-regional insurance markets.
Nigeria’s Commissioner for Insurance, Mr. Fola Daniel, handed the operators the mandate at the just-concluded West Africa Insurance Companies Association (WAICA) Education Conference in Lagos.
According to Daniel, “It is therefore expected that the insurance industry in the West African sub-region would leverage and key into this opportunity by developing the needed products and services as well as build underwriting capacity that will accommodate big risks, and halt the capital flight currently being experienced, particularly in the oil and gas business
“This will no doubt support, protect and assist the attainment of the goals of 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,” he added.
He observed that while other sub-sectors in the sub-regional finance market have integrated their operations significantly, the insurance industry, a key driver in the economies of these countries, was still a third-level player in the sub-regional financial services sector.
“Similar efforts to integrate both the banking and stock market sectors in the sub-region were successful and it is expected that WAICA and the WAMI will drive this course in the insurance sector,” the commissioner said.
According to Daniel, integration and harmonisation of the insurance industry in West Africa 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.
Enabling the flow of capital, management know-how and technologies within the sub-region, and between the sub-region and the rest of the continent is a priority outcome of the sub-regional integration process, he observed.
“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,” he added.
Daniel also identified some of the challenges along this line, including 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.
Meanwhile, reflecting on the theme of the conference, ‘An integrated and Harmonised Insurance Industry in West Africa’, he said this would align with ECOWAS’ regional finance sector integration efforts.
The above seeks to link regional markets and build capacities for effective implementation of the regional integration agenda, with particular focus on the insurance industry, he said.
Integration, according to the commissioner, 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.
The commissioner also pointed out that before integrating and harmonising the markets, the operators need to address the issues bordering on low level of financial literacy, lack of adequate awareness of insurance mechanism, and poor perception of the industry.
He equally charged the sub-regional operators to address the issue of regulation, supervision and enforcement, market conduct, self-regulation and pricing among other problems plaguing the market.
“I will expect that participants at this conference will kick-start the process of integrating the WAMZ insurance sector particularly, development a roadmap to drive integration in the insurance sector in the zone and streamlining insurance integration efforts in the sub-region. “They are also expected to propose the constitution of a council to drive the integration of insurance in the sub-region and propose the establishment of a technical committee to serve as an advisory body to the council on insurance integration in the zone,” Daniel said.