Rates for political, violence, terrorism (PVT) cover are likely to rise still further across Africa as the lag following increased rates in London is likely to hit at the 1 January renewals.
That was the view shared by a number of market practitioners who attended a roundtable during the African Insurance Organisation’s 50th anniversary General Assembly in Nairobi, hosted by Africa Specialty Risks.
Michel Darcy, director, war and terrorism, political risks and trade credit division at Chedid Re, suggested that the upcoming 1 January renewals may be quite tough as rate rises in London catch up in Africa.
However, Ryan Phillips, managing director at Afro Asian Insurance Services, said he is already seeing signs of hardening across Africa and it is hard to explain to clients why their rates are rising despite having no claims, but because of incidents in South Africa and now the Ukraine war.
He warned that there is a risk that people will choose not to insure rather than to pay high prices and there was a balance to be made between driving up penetration levels and driving up premium costs.
Linda Dayanand, executive head: operations at Emerald Risk Transfer in South Africa, said however, that clients appear to still be prepared to pay higher rates. She said there have been some challenges in finding enough capacity for some risks, particularly in the retail environment where accumulation risks are so great.
“We have been faced with instances in which we can only provide half the capacity. We are having to have some frank conversations with clients about other solutions, including that they co-insure. So far, there has been a willingness to talk about such solutions,” she said.
Yinka Omilani, director at Yoa Reinsurance Brokers, said the situation in Nigeria is a little different even though the country is heading towards presidential elections – a time when PVT is traditionally most popular.
He explained that competition between insurers is so tough that any attempts to raise prices tend to fail, regardless of the need to build a sustainable insurance sector. “We saw demand increase in the wake of the NoSARS riots but not as much as you might expect,” he added, saying retail shopping centres were among those that did increase their cover.
Zouheb Azam, head of political violence underwriting, expected prices to rise however, as the world faces a series of challenges, including rising commodity prices leading to inflation, the post-Covid fallout and now the Ukraine war. “The world is a pretty nasty place right now,” he said, “it is a dangerous time.”
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