 |
In 2015, prior to the enactment of the new regulatory requirements, the markets’ retention level amounted to 34% of the premiums.
Local players are not endowed with the resources required to cover major risks such as energy and construction, among others.
Published in April 2016, the new legislation, providing for an increase in minimum share capital, compels several local insurers and reinsurers to reinforce their financial base.
Such operations are likely to build the capacity of the market, increasing its retention level.
According to the new requirements, 100% of mass risks (motor, health,…) and 50% of major risks must be reinsured in the CIMA Zone.
While retention increase is going to boost the market in terms of premiums, it may as well pose some threats to the stability of the insurance business in the region.
Indeed, the absence of an open policy based on risk distribution, is poised to compound the difficulties of the market in the event of a major claim.