Togo - Insurance - The insurance sector

The insurance sector in Togo is highly competitive, with several companies operating in a growing market. Despite an environment marked by the adverse effects of the pandemic, the Togolese insurance market had a fairly satisfactory 2020, resulting in an operating profit of 2.570 billion FCFA, compared to 2.235 billion FCFA in 2019, representing an increase of 151.3 trillion FCFA.

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Insurance is a crucial component of sustainable and truly inclusive economic development. Insurance culture has struggled to take root in Togo. The obligation to insure one's car, motorcycle, home, business, or family is not fully understood by the population.

The Togolese Insurers' Committee was created to regulate the market and eliminate price wars, particularly concerning insurance for taxis, trucks, buses, and vehicles in transit. Governed by the CIMA (Inter-African Conference of Insurance Markets) code, the Togolese insurance market is driven by leading companies in the sector. Despite an environment marked by the adverse effects of the pandemic, the Togolese insurance market had a fairly satisfactory 2020, resulting in an operating profit of FCFA 2.57 billion, compared to FCFA 2.235 billion in 2019. This result is due, among other things, to better cost control.

The market's overall turnover for the 2020 fiscal year reached 68.767 billion FCFA, representing an increase of 10.81% compared to the previous year, with coverage of regulated commitments and a solvency margin exceeding regulatory standards. The digitalization of the sector is one of the priorities outlined in the government's 2020-2025 roadmap.

As of December 31, 2020, the Togolese insurance market comprised 12 insurance companies registered as public limited companies. Five companies operate in the non-life insurance sector, and seven in the life insurance sector, including one microinsurance company. The market also includes two reinsurance companies: CICA-RE and SAHAM-RE. A risk management pool for public passenger transport (TPV) of two- and three-wheeled motorcycles was established on April 1, 2009. This economic interest group, called POOL TPVM-VT GIE, brings together all the non-life insurance companies in the market. These companies are members of the Togolese Insurers Committee, a professional association whose purpose is to defend the moral and material interests of its members, promote and develop the insurance industry in Togo, and ensure compliance with commitments.

The market is also characterized by a dense network of insurance intermediaries (56 in 2020), some of whom operate as general agents for insurance companies alongside 34 brokerage firms. The insurance broker acts as the insured's representative and provides ongoing support. This network of intermediaries brings insurance closer to the public by offering services in local areas. Penetration rates for 2018, 2019, and 2020 were estimated at 1.501%, 1.47%, and 1.56% respectively.

The year 2020 saw the mobilization of 31.924 billion CFA francs in equity, compared to a total of 30.974 billion CFA francs in 2019, representing a slight increase of 3.071 trillion CFA francs. This mobilization may be due to the improved financial standing of certain companies.

At the end of the 2020 fiscal year, the non-life insurance sector recorded an increase in premiums issued of 5.785 billion CFA francs compared to 2019, reaching 38.040 billion CFA francs. Premiums issued in 2020 thus increased at a growth rate of 17.91% compared to 81% in 2019, a significantly higher rate compared to the previous year.

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Personal Injury and Illness insurance, despite a slight decrease, retained the largest market share at 41.6% compared to 44% in 2019, followed by vehicle insurance (28.8%).

The 2020 financial year included claims costs up by 6.4% (+1.087 billion) for a total of around 18.012 billion CFA francs compared to 16.924 billion CFA francs in 2019.

In 2020, the available margin of non-life insurance companies reached 11.805 billion CFA francs, an increase of 12.81%. The regulatory margin, meanwhile, saw a more significant increase of 23.31%, rising from 5.666 billion CFA francs in 2019 to 6.986 billion CFA francs in 2020.

Non-life insurance companies ceded more premiums to reinsurers in 2020 than in 2019, representing a significant increase of 43.91% to reach 7.957 billion CFA francs compared to 5.528 billion CFA francs in 2019.

The increase in premiums ceded to reinsurers in 2020 is explained by the implementation, on January 1, 2020, of the statutory cession at the first franc, established by CICARE at a rate of 5%. This trend will be revised downward in 2021, as, at the request of FANAF and after consultation with insurance companies, this rate is being lowered to 2.25%.

Net operating income for the year increased by 1.579 billion CFA francs, reaching 1.915 billion CFA francs in 2020 compared to 0.335 billion CFA francs in 2019, representing an increase of 4,711.3 trillion CFA francs. The continued upward trend in results reflects the strong performance of the non-life insurance companies and is largely due to improved cost and claims management.

The Life insurance division saw a slight increase of 3.11%, reaching 30.726 billion CFA francs, compared to 29.803 billion CFA francs in 2019. Compared to 2019, the breakdown by category shows a reverse trend in 2020. Individual insurance policies were more in demand, representing 501% of total premiums, while group insurance accounted for 48.81%. Market share by product shows that the leading product in the life insurance market remains Savings (group and individual insurance), representing nearly 601% of the total. The second largest activity in the division is death benefits, with a market share of 22.41%. As in 2019, no premiums were recorded for life insurance contracts, capitalization securities, or supplementary insurance during the 2020 fiscal year. Individual insurance policies saw an increase of 23.10% in their accrued benefits compared to the previous year, while group insurance policies experienced a decrease of 11.11%, resulting in a slight increase of 1.2% in total accrued benefits. In the life insurance market, 57% of accrued benefits were recorded in group insurance policies for 2020, compared to 65.1% in 2019. The largest share of financial income was attributable to group insurance, at 56%, compared to 43% for individual insurance policies.