Gabon Insurance Industry is Small, Claims Timetric
26 Apr 2013 • by Natalie Aster
Gabon has a small insurance industry, encompassing a population of 1.5 million people. Despite its size, the industry is highly competitive and largely fragmented. This is due to the presence of eight insurance companies. The industry is highly dependent on economic activity and oil. The overreliance on oil is likely to pose medium-risk challenge for the growth of insurance products over the forecast period.
Declining oil production rates are a key challenge for the growth of the Gabonese economy. Consequently, the growth of the insurance industry decelerated in 2011 and 2012 respectively, a trend which is projected to continue until 2014. However, economic activity in 2011?2012 was encouraged by public investments in construction, road and stadium improvements as a part of the preparation for the 2012 Africa Cup of Nations, which was co-hosted by Gabon and Equatorial Guinea. GDP at constant prices grew by 6.6% in 2011 and 6.1% in 2012. In line with the economic growth, the insurance industry grew by 10.5% in 2011 and 7.5% in 2012.
Insurance penetration rates as a percentage of GDP stood at 1.2% 2012, which is low when compared to countries with more developed economies. Foreign direct investment (FDI) is permitted, however, the industry primarily features regional insurance firms, rather than leading global insurers.
New report "The Insurance Industry in Gabon, Key Trends and Opportunities to 2017" by Timetric states that insurance companies in Gabon show a reluctance to reimburse claims within the stipulated time period of three months specified by the CIMA code. The reason behind this seeming inability to pay out claims is largely attributed to arrears in premium collection. Unpaid premiums represent at least 50% of the annual booked revenue of insurers. To address the issue the CIMA revised the code in mid-2011. The new regulations forbid insurers from renewing or issuing a policy for which the premium has not been paid. Companies are therefore required to supply notifications to policyholders at least 45 days in advance.
The Insurance Industry in Gabon, Key Trends and Opportunities to 2017
Published: March, 2013
Price: US$ 1,950.00
The burgeoning Gabonese economy resulted in a growth in the labor force and GDP per capita. This in turn drew the demand for personal lines of insurance. The nation’s labor force grew at an annual rate of 3% during the 2007–2010 and GDP per capita at constant prices increased at a CAGR of 2.9% during the review period. This had a positive impact on whole-life policies, marriage and birth policies and automobile insurance, which grew at respective CAGRs of 19.8%, 7.7% and 7.7% during the review period.
The Gabonese government created the Gabonese Reinsurance Commercial Society - La Societe Commerciale Gabonaise de Reassurance - (SCG-RE) in 2011 to develop the domestic reinsurance industry. With the creation of SCG-RE, domestic insurance companies are required to cede 10% of life contracts and 15% of non-life contracts to SCG-RE. The formation of SCG-RE is also likely to reduce the extent of fronting, which is particularly widespread in the Gabonese oil and gas sector.
More information can be found in the report “The Insurance Industry in Gabon, Key Trends and Opportunities to 2017” by Timetric.
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