Corruption is an issue, but the market is growing, largely due to the country's resource sector
In 2010, the non-life sector grew by 15.2% (in USD terms). According to Stitt the main drivers of market growth are oil, diamonds and agriculture. Auto insurance only became compulsory in February 2010, and Stitt anticipates growth from this product as well. But despite this growth, Angola is still very much a developing market. The majority of the country does not have sufficient income to purchase insurance and penetration is therefore very low, says Stitt. In addition, the market has only recently opened up to private insurance companies.
Until February 2000, Angola’s state-owned insurance company, ENSA, was the only company permitted to write insurance. In 2001, AAA Seguros, which is majority owned by the national oil company, Sonangol, also became licensed. Though they don’t have an official monopoly, Stitt says that AAA Seguros handles virtually all of the oil business in the country.
There are currently 13 insurers licensed to write life and non-life insurance in Angola but Stitt says not all of these insurers are actively operating and many do not yet offer life products. Though the country has historically based its insurance practices on the Portuguese model, Stitt says South African practice and wordings are becoming more evident as an increasing number of South African insurers and brokers move into the country.
Given the country’s insurance history, approximately 60% of Angola’s insurance sales are through the direct market. Despite this, Stitt says the broker market is fairly strong. Though there is no official data available, Stitt estimates nearly 35% of the market is handled through the broker channel.
Until 2000, there was no comprehensive insurance law in Angola. In that year, Insurance Law 1/00 was enacted, which brought insurance operations under the jurisdiction of the Ministry of Finance and created the national regulator, the Institute of Insurance Supervision (ISS). Amendments to the law, of which there are many, are issued by decree. For example, Decree 35/09 of August 2009 created further regulation around mandatory motor vehicle public liability insurance. It also required motor vehicle sports events to carry public liability insurance. In 2010, the ISS issued a number of regulatory circulars, including Circular 01-iss-mf-10, which gives guidance to insurers on third-party motor insurance.
Under Angolan law, non-admitted insurance is not permitted, as business must be placed with a locally authorized insurer. The only exception is if a contract is placed abroad with the prior approval of the ISS. According to research from Axco, the ISS is not likely to grant approval to place contracts abroad, unless the risk cannot be covered locally.
Though there have been recent legislative developments in the country, Stitt says, “The capacity of the supervisory authorities isn’t what it could be.” Corruption is a major problem in Angola, and Stitt says companies should be careful who they deal with. “Some of the companies are very professional and will certainly pay their claims and so on and so forth, some not so,” he says.
Insurance Snapshot – Angola
- 13 insurers, but not all are fully operational
- US $749 million in non-life market premium in 2010
- Examples of mandatory coverages for businesses: Workers compensation, motor third-party liability, professional indemnity for insurance and reinsurance brokers, aviation liability.
Copyright 2012 Rogers Publishing Ltd. This article first appeared in the July/August 2012 edition of Canadian Insurance Top Broker magazine.