The Sudanese insurance operators have pointed out some of the major challenges they had to surmount in the course of establishing micro-insurance and micro-takaful insurance as a major income earner and means of deepening insurance in the country.
According to operators, the high rate of default by beneficiaries of micro-insurance policies and programmes and lack of efficient risk management tools to eliminate fraud and other risks topped the list of the challenges they had been facing.
The Assistant Managing Director of Underwriting-Sherikan Insurance and Reinsurance Company, Sudan, Mr. Omer Elfarowg Ahmed said this when he shared the Sudanese insurance market experience on micro-insurance and takaful insurance at the ongoing 39th African Insurance Organisation (AIO) Conference and General Assembly in Khartoum, Sudan on Monday.
Sudan is believed to be the most developed micro-insurance and micro-takaful insurance market in Africa, and as such serves as a model for other countries across the continent.
The conference with theme, ‘Challenges and Opportunities of Micro-takaful and Micro-insurance in Africa’ brought together insurance practitioners from Africa, Australia, Europe, Middle East and Asia countries.
Reflecting on "Micro-insurance as Stimulus for Micro-finance: Sudan View", Ahmed identified default on the part of beneficiaries of the scheme as the greatest threats to the programme.
Another serious challenge to micro-insurance, according to him, had to do with the absence of an effective risk management tool, which can effectively eliminate fraud and other risks in the system.
Ahmed also noted that the absence of reinsurance capacity for micro-insurance and takaful insurance is also a threat just as the absence of credit information in the market and moral hazards pose great danger to the system.
In spite of these challenges, Ahmed said there are so many prospects for micro-insurance and takaful insurance across the continent, adding that the economy would benefit from the attendant accumulation of huge micro-finance fund and expansion of the micro-finance infrastructure.
He also said the job of the market regulator would be made simpler when the micro and takaful insurance market is grown while the micro-finance system and legislations on insurance and insurance generally would improve significantly from the process.
Micro-insurance, according to him, serves as a guarantee for loans for finance providers, while policyholders benefit from loss prevention services put in place by service providers and share in the surpluses recorded at the end of the accounting period.
He also maintained that the system also reduces insurance costs and economic waste, while helping to alleviate poverty in the system, making the industry socially responsible.
Relating how the industry grew micro-insurance and takaful insurance market, Ahmed said the various micro-insurance products were classified into material damage, credit and family insurances.
He explained that the industry provided insurance protection for livestock, fire and burglary, motor, agricultural and two other products and encouraged beneficiaries to form industrial unions and cooperative societies group to be eligible to participate.
On how operators in other climes could surmount some of the identified problems, Ahmed suggested that the Central Bank in such countries should maintain an up-to-date information on beneficiaries with a view to ensuring that anybody who fails to meet past obligations with regard to credits would not get another one from any other operator in the market until he pays up.
He also suggested that government could create worthwhile incentives for those who repay their loans in time to encourage others to follow suit.
The Secretary-General of AIO, Ms. Prisca Soares, had before now confirmed Sudan as having the most developed micro-insurance and takaful insurance market in the continent.
"Sudan is the most developed takaful market in Africa which makes it the ideal place to learn about that aspect of insurance and it is also the first time the conference would be holding in Sudan," she said.
AIO is a non-governmental organisation recognised by many African governments. Its main objectives are the promotion of inter-African co-operation and development of a healthy insurance and re-insurance industry in Africa.
Sudan Vision Daily
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