Compulsory insurance now affects other areas and not just the automotive sector. This is part of the reforms to the new insurance law, promulgated in September.
Auto insurance will no longer be the only compulsory insurance in the country, following reforms to the law on insurance in Madagascar. “Insurance subscription is now compulsory for real estate construction, schools, but also vehicle maintenance”, announced Henri Rabarijhon, governor of Banky foiben’i Madagasikara (BFM), yesterday on the occasion of a partnership signature with the Ministry of Economy and Finance in Antaninarenina.
This memorandum of understanding aims to formalize the conditions for the transfer of supervision of the insurance sector to the Banking and Financial Supervision Commission (CSBF), a branch of the BFM.
Adopted at the level of the two parliamentary chambers in May 2020, the new law on insurance was promulgated on September 1, 2020. As a reminder, the public treasury was previously the supervisory body for insurance.
Concretely, the main innovations and improvements made in this text are supposed to broaden the landscape of the sector. Besides the expansion of compulsory insurance, other reforms have been introduced. Anyone in the sector can now establish themselves as a reinsurance company, if this possibility was not previously foreseen. Foreign reinsurance companies are also allowed to establish themselves as branches.
Agricultural insurance in sight
In the agricultural sector, so-called index agricultural insurance will be implemented. This type of insurance can be a response to agricultural risks. “Climate risks will be the index used in this type of insurance. We have already developed insurance for standing crops in Madagascar, but this has mainly focused on the risks associated with cyclones ”, explained Henri Rabarijhon.
Insurance offers remain very little developed in Madagascar. “The insurance market in the country represents only 0.7% of the national GDP. However, this rate is between 1.4% and 2% in other African countries. Only Mali is behind Madagascar where the insurance market represents 0.4% of its national GDP, ”continued Henri Rabarijhon.
It is clear that the poor quality of services provided by insurance companies is a discouraging factor among potential policyholders. “The CSBF, which is now the insurance supervisory body, will strengthen supervision in this sector,” said the governor of the BFM.
Riana R.
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