Though the air transport sector represents less than 1% of premiums subscribed in the non-life segment of insurance services in Africa, local actors think it has growth potential and are inviting regulators to limit the stake non-Africans could acquire in the sector.
Actually, large reinsurance groups based notably in London capture 90% of the premiums issued in that sector.
According to the Pan-African reinsurer Africa Re which emitted the idea of limiting stakes acquired by international groups in the sector, the value chain of civil aviation in Africa presents a good growth opportunity for reinsurers.
Indeed, late June 2017, it identified 1390 aircraft belonging to 238 airline companies in 48 African countries. Apart from these public companies’ aircraft, there are hundreds of planes and helicopters belonging to African governments and safari companies. In the next 20 years, 800 new machines will be added to this fleet, 60% of which will be new acquisitions while 40% will be replacements.
Globally, this idea emitted by Africa Re, highlights the challenge of high-risk reinsurance in Africa. In almost all the regulations, the challenge of reinsurance premium retention is the main issue of the reinsurance sector prompting every strategy.
In Kenya, Namibia and even in the CIMA zone reforms have been initiated but they should account for African insurers’ capacity to absorb the opportunities presented by high risks’ coverage. It is also worth mentioning that this debate could also be extended to inland and ocean freight sectors.
By Idriss Linge
Source: ecofinagency.com
