President of the Cameroon’s business owners association (ECAM), the former insurer talks here of the change that ICT’s increasing use by firms could bring about in his country, and Africa as well.

You recently organized in Douala, Cameroon’s economic capital, a workshop baptized “Assurtech”. What do you aim to achieve through this event?

The main goal of Assurtech is to stimulate insurance’s development via digitization. Clearly put, it brings actors of the insurance and digital sectors so they can find appropriate solutions to boost the first which is still extremely undeveloped in our country, and in Africa as well. Digitization has become a major driver for economic growth worldwide starting with the finance, health, services and insurance sectors.

For this first edition, we wanted to lay the foundations of the event, show actors of the insurance industry and administrative authorities, especially those from the ministry of finances, that assurtech is possible in our country. We have demonstrated it through Insurafrica and Mica, digital solutions developed by young Cameroonians and a local insurer.

Do you believe digitizing insurance services is the main route towards the optimal development of the insurance sector in Cameroon?

Yes. Truly, Cameroon records a significant expansion of internet’s usage with a penetration rate of 21% against less than 2% for insurance. Also, the growing generation is more connected be it on smartphones, tablets or a computer. Digital has become a real vector of dissemination and development in many sectors. Insurers would gain a lot by investing in this channel which is an excellent tool for rapid growth.

What are the major benefits that could be derived from democratizing the use of ICT in the insurance sector, both for insurance firms and their potential customers?

Its advantages are many. Amongst others, digitization bring insurers closer to their clients, it facilitates and accelerate file treatment, saves time for both insurers and insured, when underwriting policy, during claim declaration and payment, helps prevent fraud, better manage insurers’ charges and mutualize risks…

Up to what extent could, according to you, ICT help raise insurance’s penetration rate in Cameroon, knowing that it stands at about 2% presently?

Based on internet’s penetration rate which stands at 21%, and mobile’s, knowingly 60%, paired with the introduction and democratization of micro insurance, insurance’s penetration rate should stand around 5%-6% in the next three years or more, and stabilize at around 10%, in the next five years. At least, that is what we aim for. Digitization could cause insurance revenues to grow fivefold and significantly improve the sector’s contribution to our country’s GDP and the economy’s financing.

In Cameroon, insurance companies are reputed to not keep their commitments towards their clients. What is the reason for this, in your opinion as an ex-insurer?

Cameroonian insurance firms have a bad reputation, and that is not always because they deserved it. Truly while many of these insurers meet their commitments, they fail to let the population know about it. Nevertheless, it is true there are still some companies that hurt the profession’s image. I often say that this profession is not much appreciated and that is because not much is known about it.

The inter-African Conference for insurance markets (CIMA), insurance’s regulator in 15 countries in West and Central Africa, has initiated a long restructuring process to improve the sector which is far from being completed. The sector struggles against both structural (tight market, low capitalization from actors, weak insurance culture, inefficient controlling by monitoring authority…) and managerial (excessively high operational costs, non-innovative management, mistakes in management…). As a result, the meager revenues collected, instead of being used to settle claims, are used to pay salaries or spent on expenses that have nothing to do with operations.

Unfortunately, due to this inverted cycle of insurance (premium is paid in advance and claim sometimes years after accident), insolvency is often discovered too late, just like in the occurrence of diseases that are found out too late…

How could digitization help improve this reputation?

Digitization will make insurance in Cameroon more modern. It, in fact, currently cleans insurers of their conservative and opaque reputation. It will make insurance product available virtually everywhere and at all times. We are betting that it will force insurers to adapt and reinvent themselves. And most importantly, it concerns the youth, the upcoming middle class, which is more educated and informed about the issues of wellness and security.

Insurance therefore has an incredible chance of transforming or rebuilding its image and it cannot afford to miss it.

For about a decade now, most of the sanctions issued by the regulator of the insurance sector in Central and West Africa (CIMA) are addressed to Cameroonian firms. Is the Cameroonian market the most undisciplined in the CIMA zone, according to you? If yes, why is it so? 

Cameroon has the greatest number of insurance firms after Cote d’Ivoire. It is thus normal that it would be the most sanctioned in the CIMA zone. You are however right in the way that the country alone receives close to 50% of all the sanctions issued in the zone in regards to withdrawal of approval. In fact, during the last session of the CIMA, a Cameroonian company had its approval withdrawn.

We must admit that Cameroon deals with many of the issues that plague the African insurance industry: market tightness, undisciplined market, inability to respect a number of rules, false statements and balance sheets.

Moreover, our market was the least prepared for the CIMA’s reform: complacency approvals, lack of control, thus of a supervisory culture… However, things are changing and we have robust national companies that compete favorably with foreign firms, and show good results both in and outside the CIMA zone.

The sector’s restructuring must be completed because bad firms are hurting it a lot. Only after this will the sector be able to fully develop. And with a regulator focused more toward development, and a more modern regulation.

Brice R. Mbodiam for Business in Cameroon