The oil and gas projects underway in the Rovuma basin, in the province of Cabo Delegado, northern Mozambique, are seen as key points for developing the country’s economy, and at the same time they have aroused great interest on the part of companies supplying goods and services, which hope to make a profit.
Even with the development of the sector and the stability of the market, national insurers are still vetoed from taking part in mega-projects, as they are considered inexperienced and have little management capacity.
In an exclusive interview with Diário Económico (DE), the secretary-general of the Mozambican Association of Insurers (AMS), Momade Mucusse, explained how the insurance market is performing in Mozambique and revealed the real causes of the absence of insurance companies in ongoing projects.
AMS was set up in 2007 in Maputo and constituted under the terms of the law to defend and promote insurance and reinsurance companies. The organisation has a separate legal personality from its members and enjoys administrative, financial and asset autonomy.
In general, what is your assessment of the insurance market in Mozambique?
The insurance market in Mozambique is attractive and more structured. The decision taken by the Bank of Mozambique to increase share capital has put insurers in a more resilient situation.
At the moment, we’re talking about a capital of around 295 million meticais for each insurer that operates both life and non-life business. As well as protecting the market, this measure prevents the emergence of companies with dubious behaviour and unable to fulfil their obligations.
In statistical terms, there are currently only 21 insurers operating, but I think there is room for more, and this will generate greater competitiveness and a better supply of services. However, as AMS, we assume that the country needs to capitalise in order to receive more companies and thus develop the Mozambican economy.
There are several megaprojects underway in Mozambique whose revenues will help to boost the national economy and put the country on another level in terms of recognition. Looking at these points, how are national insurers participating in oil and gas projects?
Megaprojects are important for everyone, but the participation of insurers is still a major challenge because, on the one hand, the question arises that we don’t have the management capacity, which is not true, because we are prepared. What happens is that the big companies prefer to ignore the existence of certain insurance dynamics.
As we know, in any country in the world where this type of project exists, there is no insurance company that, on its own, has been able to sustain a project of this nature. What has happened is that specific dynamics have been applied, which can also be implemented in the national context.
For Mozambique, what happens is that the companies are already insured, which prevents the penetration of national insurers.
If, perhaps, we had the opportunity to participate, we would take on the mission responsibly, using the rules of the insurance area, such as the co-insurance regime (union between insurers to take on a certain risk domestically), as well as, on the other hand, using reinsurance (the insurer transfers to another, in whole or in part, a risk taken on by issuing a policy or a set of policies).
In recent years, Mozambique has been greatly affected by extreme events [climate change] that cause major damage and losses, especially for communities. What has been the role of insurance companies in these cases and what mechanisms are being implemented?
Nowadays, climate risks have been greatly recognised by insurance companies, which have created some packages to respond to these emergencies. There are insurance companies that have incorporated agricultural insurance and this idea arose from experiences during the cyclones that destroyed various crops.
Agriculture is seen as a high-risk activity, especially with the advent of climate change, but if we look on the bright side, we can help farmers a lot so that they also feel protected in the event of a disaster, because the insurance will position itself as a protector, assuming the risks.
At the moment, we only have Empresa Moçambicana de Seguros (EMOSE) and Hollard Moçambique Companhia de Seguros working on this component, but we would like to expand even further.
A large part of the Mozambican economy is run by informal workers. Is there any possibility of creating an insurance scheme to cover this population?
There is and it would be a good initiative, because informal workers are part of the economy and, in these cases, it is suggested that microinsurance be created to help solve the problems of this segment of people.
Microinsurance is aimed at low-income populations, with packages designed according to each worker’s ability to pay. As an association, we look favourably on this because it will broaden the insurable mass and bring gains for insurers.
Which insurance has been growing the most in Mozambique?
Health insurance is the one that stands out the most, because it has been growing a lot, taking into account the fact that people are becoming more aware of the costs related to health, which makes them more inclined to take out this type of insurance.
How is car insurance?
It’s been growing recently, but we’re still a long way from what we’d like, as insurance penetration in the national market is still in its infancy. Insurers need to be more dynamic.
There are statistics on the subject, but we are moving forward with the creation of a common database for all insurers, which the Traffic Police can consult to see whether a particular vehicle is insured or not. We believe that this mechanism will help and facilitate control, avoiding the duplication of insurance on different cars, as well as increasing the level of transparency.
However, there is a major dilemma in this area regarding the insurance of foreign-registered vehicles. As you know, there is a 30-day civil liability motor insurance policy specifically for these vehicles that temporarily enter the country.
However, since 2016, all the insurers have been deactivated along the Ressano Garcia border by order of the National Migration Service (SENAMI), and AMS continues to make endeavours to find a solution to the phenomenon, which is an important issue.
This is a problem that could tarnish the country’s security and image. The removal of insurers at borders opens up space for the sale of fake insurance, where criminals use the image of a particular insurer.
What work is being done to get insurers back to operating at the borders?
We started the process of returning to the borders in 2019, and we raised the possibility of insurers selling insurance from a platform, but we didn’t get a response. We recently organised our first Annual Insurance Conference where we discussed various issues and this was one of them. We are planning a meeting with the current Minister of the Interior.
How many members are there in AMS at national level?
Of the 22 existing insurers, only 15 are part of the association, but we want to bring them all together, including the brokers There are, however, some procedures that need to be improved so that there are no rifts between the parties.
What are the prospects for the insurance sector in the near future?
We are optimistic, considering that every day we find more people with knowledge and concern about insurance matters. We want to grow even more in the market, increase the number of companies operating and help develop the economy.