East African insurance regulators are preparing to bring their supervisory systems closer together, with plans for a shared assessment framework and digital platform aimed at improving how insurers are monitored across the region.
The regulators agreed to adopt a common template for checking insurers’ compliance with insurance core principles, allowing individual countries to assess their markets using the same approach and compare their findings with other regional markets.
The decision was reached during a two-day meeting attended by insurance commissioners and supervisors from several East African countries under the East African Association of Insurance Supervisors (EASA).
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.
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.
“We have agreed to harmonise a template so that we can do assessment at country level, but also compare with our peers. The standardisation is expected to strengthen supervisory consistency as insurers increasingly operate across borders and take on more complex risks,” said Sande.
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, a move regulators say is necessary as the insurance industry becomes more digital.
They said older methods of gathering information directly from individual insurance companies were becoming less effective as digital services continued to grow.
“For us to be in charge and do effective supervision, we need to be enabled by a software. The proposed system will allow supervisors to use the same platform while sharing information and comparing developments across markets,” he said.
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.
They 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.
The regional reforms are 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.