Scheduled for the afternoon of February 17, 2020, the traditional debate between the regulator of the Inter-African Conference on Insurance Markets (CIMA) and market players, a highlight of FANAF's general meetings, reviewed the issues of the sector in a constructive framework. On the case posed, at first sight, of the limitation of systemic risks following the bankruptcy of a life insurance company, the FANAF suggests the establishment of a guarantee fund to protect the savings of subscribers and strengthen the general ecosystem.

As the Secretary General of CIMA, Issofa Ncharé, reminds us, this device, if it were to be adopted, would reinforce an arsenal of "preventive measures put in place by the regulator" and ranging from the separation of the life and non-life branches , the raising of minimum capital, strengthening of equity and permanent consultations within the Stability Committee for West and Central Africa.

Speaking, Saliou Bakayoko, Managing Director of Sunu Assurances Vie Côte d'Ivoire and President of the Association of Insurance Companies of Côte d'Ivoire (ASACI), called for attention to systemic regulation, alluding Article 336-3* stipulating that in the event of a capital loss of 5% on an equity portfolio, the mathematical provisions must be offset by ten times the observed shortfall.

The measure taken in a period of euphoria, when the Abidjan Regional Stock Exchange (BRVM) was running at double digits, makes stock market investment capital-intensive and risky. The speakers opposed their arguments on the question at length by comparing the financial markets of the CEMA and UEMOA zones and those of France (in this country, the provision is not to be fully constituted if the company satisfies its solvency margin) and Morocco, which are much more developed with larger transaction volumes, as Richard Lowé, president of the Activa group, reminded us. For his part, Abdellatif Mouad, Director Compliance and Regulation CIMA Zone of Sanlam Pan Africa, draws attention to the case of the revaluation of assets in private equity investments.

Regulatory and tax inflation

In short, insurers generally deplore, through this textbook case, a regulatory and tax inflation that hit the sector from 2009 to 2019. “States perceive insurance as a cash cow” , deplores Adama Ndiaye, president of FANAF, recalling the case of automatic debit on turnover applied in certain countries, VAT on life insurance premiums or the taxation of the bonus for the settlement of claims In all , more than 50 measures (i.e. 5 per year) have been added in ten years to an already substantial system. Direct taxation on turnover, the proliferation of legal transfers to the first Franc and the impossibility of transferring funds from the CEMAC zone to the WAEMU zone, and vice versa, while both are subject to the same regulations and the same regulator, are all obstacles mentioned during the meeting.

In response, CIMA recalls the particularity of the tax issues dealt with in other bodies, the necessary improvement in the operational efficiency of the sector (the rate of general expenses exceeds 38% for non-life insurance companies), while ensuring that the question of the transfer of funds between the two zones is the subject of a file submitted to the financial stability committee and, behind it, the reactivation of the compensation mechanism between the BCEAO and the BEAC and a tax agreement between the two areas.

The other issue discussed was the outcome of raising the minimum capital in the sector. From the outset, it should be said, the expected wave of mergers did not take place. This is all the more so as the States seem to have initiated (the case of Côte d'Ivoire and Burkina Faso) a series of adjustments sometimes superior to the results of the companies.

However, as the expert Abdou Cissé rightly points out, "one should not tax the invested capital but the income from the invested capital". Abundant in the same direction, Jean Kacou Diagou, CEO of NSIA, draws a parallel between the margins of insurance companies, generally between 2 and 3% of turnover, and those of banks, between 10 and 15%. “Insurance is a long-term investment. We have a pedagogical problem with taxes and our regulators (including CIMA) who confuse the funds we hold in banks and our results”.

It is true, replies Issofa Ncharé, that the insurance sector suffers from a poor perception in connection with the payment of claims. "We did not reverse the curve of notoriety of our image", continues the SG CIMA which recognizes the regulation on the raising of the minimum capital to have led to a stability of the workforce. Pending a special session devoted to the issue (scheduled in two weeks), it must be said that insurers are rather skeptical and would particularly like to know the measures taken against latecomers.