It is no secret that the insurance industry in Cameroon faces problems; Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
It is also a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools the client's risks to make payments more affordable for the insured.
Read Also: Types of Insurance Companies In Cameroon.
How to Register an Insurance Company in Cameroon?
To register an Insurance company in Cameroon, and complete the registration procedure, the investor must:
- Meet up with the provisions of the Law in force.
- After fulfilling the registration of a Public Limited Company or a Mutual Insurance Company, a request for the operating license must be made to the respective regulatory bodies in charge.
- The Law that governs the setting of insurance companies in Cameroon is the Inter-African Conference on Insurance Markets, known as the CIMA Code.
- The CIMA code is the leading insurance supervisory authority in all Sub-Saharan French-speaking African nations.
10 Problems Faced By Insurance Companies in Cameroon (Industry)
1. The Cameroonian market is doubtful of insurance companies
Anybody who has spoken to the average Cameroonian about insurance can give a firsthand experience of how Cameroonians generally have a negative attitude towards insurance. This accounts for the low patronage of insurance companies in Cameroon.
2. Inadequate access to information technology
Despite being in a world where information technology seems to be ruling everything, many companies in the insurance industry still do not have a fully automated and/or integrated computer software system.
The challenge here is that the document management system is relatively poor compared to other sectors in the economy.
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3. Antagonistic and hostile economy
A stable economy promotes savings necessary to finance investments, a prerequisite for achieving a viable insurance industry that can help sustain economic growth.
Insurance companies are sensitive to economic fundamentals and sometimes factor in many financial variables in investment decisions.
4. Weak regulatory framework
The regulatory framework for insurance is fragile. The national insurance commission is empowered to ensure the effective administration, supervision, regulation, and control of the insurance business in Cameroon.
5. Lack of skilled personnel
As funny as it may seem, there is a massive shortfall of trained professionals in the insurance industry. Insurance companies inadequately train their staff.
The majority of the insurance companies attract low-skilled personnel due to inadequate remuneration packages. Thus, there is always the inability to retain competent employees.
6. Poor knowledge of insurance services by prospective assured
The insurance culture in Cameroon is deficient. This may not be unconnected to the lack of knowledge about life insurance products. Many educated Cameroonns still do not see a reason for insurance.
Scholars have stated an urgent need for insurance companies to renew their marketing communication strategy based on creating awareness and informing the consumers of the benefit inherent to insurance...
7. Emerging threats amidst macroeconomic uncertainty
Like most other industries, the Cameroonian sector is affected by the macroeconomic environment. The downturn in CameCameroon'stunes, which had its roots at declining global crude oil prices since 2014, has triggered changes in the consumption pattern of insurance products in recent times.
While contributions from the non-life business segment have declined, the industry has seen increased surrenders in the life business segment.
8. Lack of training
The lack of training of the board of directors on basic insurance operations results in the board's inadequate supervision of executive management activities.
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9. The demand for actuaries
The demand for actuaries in the Cameroonian financial services industry became more pronounced following the introduction of IFRS.
Incidentally, every insurance company needs to have an actuary in the insurance industry, as IFRS requires that every entity's insurance sheet reflects the accurate and fair representation of the obligations.
Thus, the death of actuaries in Cameroon would affect the regulatory body's insurance and oversight functions. Furthermore, there is a lack of awareness about the actuarial profession and what actuaries can do.
10. Lack of support/embracing contribution of other non-insurance special skills
Insurance companies in Cameroon also emphasize technical skills against specialized business skills. This restricts the growth and development of non-insurance skilled professionals within the insurance industry.
Read Also: Solutions to Challenges Facing Insurance Companies In Cameroon.