How are insurance regulators in sub-Saharan Africa being affected by, and responding to, COVID-19?
HARARE, The COVID-19 pandemic and the measures governments have imposed to curb its spread continues to have far-reaching consequences for insurance industries across sub-Saharan Africa (SSA). In the midst of increasing uncertainty, insurance regulators have had to explore a range of options to ensure that they are able to fulfil their core mandates of market stability, consumer protection and, in some cases, insurance market development. The COVID-19 pandemic has affected and disrupted the everyday operations of insurance supervisors – forcing them to adapt to remote supervision of, and communication with industry. Insurance regulators have recognised that regulated entities face the increased burden of uncertainty and rapid adaptation too.
As a result, insurance regulators across SSA have had to perform a balancing act between offering regulated entities regulatory relief during a challenging time and simultaneously monitoring vulnerabilities in the market closely to ensure that consumers remain protected. Different regulators have so far chosen to prioritise different sides of this trade-off. Some insurance regulators have eased up on their usual regulatory requirements in an endeavour to enable regulated entities to enhance their capacity to respond to COVID-19. Others have been more concerned with the set of issues arising from the pandemic, such as the potential for the face-to-face nature of insurance business in their markets to spread the virus.
As such, many insurance regulators have been encouraging or even requiring regulated entities to innovate and digitise their internal, regulator- and customer-facing processes to comply with the social distancing restrictions put in place to curb the spread of the virus. Shifting away from physical/face to-face processes requires insurers to invest in upgrading and adapting their infrastructure and skills. Although these investments may carry considerable short-term costs, provided regulatory uncertainty and regulatory barriers are addressed to encourage and enable these investments, they have the potential to enhance providers’ efficiency and to lead to substantial gains in the medium- and longer-term. This note takes stock of the effect of COVID-19 on insurance markets across SSA as it relates specifically to insurance regulators. It is based on our engagements with 13 supervisors – across 27 SSA countries – as well as with 33 insurance providers (including a survey administered to 68 insurers) and supplemented with desktop research. The report can be accessed on> https://www.fsdafrica.org/wp-content/uploads/2020/08/Insurance-regulators-COVID-19-28.08.20.pdf