How are Côte d’Ivoire insurance companies expanding in UEMOA

Côte d’Ivoire’s importance as a regional centre for the insurance sector is growing, as an increasing number of pan-African players open offices and branches in Abidjan. The country has been a catalyst for the integration of public and private insurance stakeholders in the 14 member countries of the Inter-African Conference on Insurance Markets (Conférence Interafricaine des Marchés d’Assurances, CIMA). Even though large pan-African and international players dominate the insurance sector in Côte d’Ivoire, and in the CIMA region more broadly, Ivorian insurance players have an eye on extending their operations in UEMOA.

Regional Leader

In terms of total premium for the life and non-life segments, Côte d’Ivoire is the largest market in the CIMA zone, followed by Cameroon and Senegal. Prominent international players such as Germany’s Allianz, France’s AXA, Morocco-based Saham and pan-African SUNU Group operate through their local branches and contend for market share in an increasingly competitive environment. In recent years strategic partnerships and acquisitions have shaped this landscape, with the larger firms targeting specific markets and segments to facilitate regional expansion.

Ivorian-based insurer NSIA illustrates this trend well. In September 2021 the company grew its presence by acquiring four Sanlam subsidiaries, including the firm’s life insurance units in Togo and Gabon, and the non-life insurance units in Congo and Guinea. At the same time NSIA was expanding into those countries, it sold its non-life subsidiaries in Mali to the South African firm.

Regulatory Hurdles

As Ivorian insurers aim to replicate their success outside their home market, they are navigating legal and regulatory idiosyncrasies in other markets. “There are good experiences of Ivorian companies expanding their operations in ECOWAS and Central Africa, but other regions have greater barriers to entry. In North and Southern Africa, Ivorian players need to comply with additional requirements like notations, accreditation from internationally recognised agencies, higher minimum initial capital and partnerships with local investors, which are not enforced in CIMA,” Luc Noubissi, senior insurance specialist at CIMA, told OBG. In terms of operational capability, the modest size of the CIMA market has the potential to give large pan-African businesses an advantage.

Increased regional and continental competition is likely to pave the way for more consolidation, with potential acquisitions of small local operators by pan-African and international groups. At the same time, there has been increasing harmonisation of the insurance landscape of the region, as seen in Morocco, Cameroon, Gabon, Burkina Faso, Senegal and Kenya, which is reflected in the growing dominance of the top-five players in Côte d’Ivoire.

Such developments dovetail the second phase of planned increases in insurance companies’ minimum capital requirements within the CIMA region. The increase will raise the threshold from CFA3bn ($5.2m) to CFA5bn ($8.6m). Initially planned for the end of 2021, the implementation of the regulatory change had been postponed to 2024 at the request of smaller insurers, to enable them to prepare for this mandate and recover from the effects of Covid-19.

Aside from strategic acquisitions, businesses are seeking regional alliances to concentrate their operations on the continent. For example, smaller insurance providers in Côte d’Ivoire and beyond could stand to benefit from discussions between Allianz Group and Sanlam about their operations outside of South Africa.