A messy situation
Who would have imagined, a few years ago, that the world' s number one insurance company, the American giant AIG would be filing for bankruptcy and that Swiss Re would be rated A after having sunk in the red zone and parted ways with its Chairman and Chief Executive Officer.
It is show time: everyone is involved: bosses, rating agencies, financial capitalism, toxic products, ...
The crisis has brought to light many dysfunctions which had been kept in the shade for a long time. Insurers' costs structure is among the irritating topics.
In Africa, many insurance companies bring out overhead costs (excluding commissions) representing 35% or more of the written premiums. Such expenses ratios may go up to 50% or 60% for some companies.
With loss ratios comprised between 30% and 40% and poor commissions awarded to intermediaries, it is legitimate to question the purpose of insurance premiums: pay claims to the insured? Properly reward business providers? Or hand over salaries to executive staff members?
