Insurance regulators from East African countries have agreed to harmonize their supervisory systems to improve the monitoring of insurers across the region. The regulators, who met under the East African Association of Insurance Supervisors (EASA), aim to adopt a common template for checking insurers' compliance with insurance core principles. This will enable individual countries to assess their markets using the same approach and compare their findings with other regional markets. The move is expected to strengthen supervisory consistency as insurers increasingly operate across borders and take on more complex risks.
The decision to harmonize supervision systems was reached during a two-day meeting attended by insurance commissioners and supervisors from several East African countries. EASA chair Protazio Sande said adopting one assessment template would give regulators a clearer way of examining their domestic markets while measuring them against their regional counterparts. The standardisation is expected to improve the consistency of supervision across the region. Insurance services are guided by 25 insurance core principles, but regulators have been using different methods to determine whether companies meet the required standards in their respective markets.
Beyond the common assessment framework, the regulators agreed to pursue the development of an integrated insurance supervisory software for the region. The proposed system will enable supervisors to obtain and exchange information in real time through a shared platform. This is necessary as the insurance industry becomes more digital, and older methods of gathering information directly from individual insurance companies are becoming less effective. The system will allow supervisors to use the same platform while sharing information and comparing developments across markets.
The regional supervisors are also working towards bringing together digital transformation practices used in the insurance industry. East African countries are at different levels of digital adoption, with some markets having developed more advanced systems in areas including insurance distribution and mobile-based insurance products. Regulators intend to identify and document these practices and make them available across the region, with the aim of helping other markets adopt methods that could widen access to insurance.
The push for closer supervision comes as insurers face an expanding range of risks and growing demand for cover linked to major economic activities. Among the areas creating larger and more complex risks are mining, oil and gas, and other emerging economic activities in the region. Regulators said the changes in the risks being taken on by insurance companies also require firms to maintain enough capital to match the level of risk they underwrite.
Regulators said insurers are increasingly expected to base their capital levels on the risks contained in their businesses, rather than depending only on set minimum capital requirements. This is a key aspect of the regional reforms intended to create greater consistency in insurance supervision while improving the flow of information between regulators and supporting the spread of digital practices across East Africa.
The East African insurance regulators' move to harmonize supervision systems is expected to improve the monitoring of insurers across the region. The adoption of a common assessment framework and the development of a digital platform will enable regulators to obtain and exchange information in real time, compare developments across markets, and make informed decisions. The reforms will also support the growth of the insurance industry in the region by widening access to insurance and promoting digital transformation practices.
Key points
- East African insurance regulators agree to adopt a common template for checking insurers' compliance with insurance core principles.
- Regulators to develop an integrated insurance supervisory software for the region to improve information exchange and supervision.
- The reforms aim to create greater consistency in insurance supervision and support the spread of digital practices across East Africa.
