Increased competitiveness in Angola’s insurance sectorSeptember 20, 2022
Kianda Trozo, president of the board of directors of Protteja Seguros, talks to The Energy Year about the impact on Angola’s insurance sector from the new oil and gas coinsurance regime and local content law, as well as the company’s strategy for participation in the oil and gas sector. Protteja Seguros is an Angolan insurance provider focused on corporate insurance.
How will the new oil and gas coinsurance regime and local content law affect the domestic insurance sector?
Protteja has been a part of the coinsurance regime since 2019, along with the top 20 companies in this business. The insurance industry in Angola is formed by more than 20 companies, but to be a part of the coinsurance regime, they must present financial strength, transparency and a sustainable organisation. This is because the regulator has to pay close attention to insurance operations to develop trust and confidence in the local market.
Including insurance services in the exclusivity and preferential regimes of the new local content regulation for oil and gas is very beneficial because there are many resources that beforehand were transferred directly overseas. We understand that local companies already have enough know-how to evaluate and underwrite such risks, and the companies also have international partners that allow them to do so. I am certain about the immense advantages this will bring to the market, in terms of the growth of market capitalisation, company size and revenue.
Will these regulations increase the insurance sector’s contribution to the national GDP?
In the coming years, with the opening of the insurance sector and the financial services penetration of the domestic oil and gas sector, the contribution of insurance to GDP will skyrocket along with insurance penetration. We know insurance is profitable. Our business is about volume and dispersion, so it’s necessary for the sector to inject more capital to reach a critical level. We have 30 million people in this country, so the opportunity is great.
The economy cannot move forward with uncertainty, so we are here to enable certainty – to manage risks and pave the way for socioeconomic growth. Taking risks is the speciality we undertake to allow other companies to grow sustainably. This environment will allow Protteja to make medium- and long-term investments which are critical for long-term company growth and wealth creation.
How are oil and gas insurance premiums different from those of other products in Angola?
If we look at the multi-million-dollar oil and gas sector, the level of premiums is extremely high. Distributing these premiums among local companies will result in enormous growth.
Independent of the fact that local companies still have to transfer a great part of the risk to large reinsurance companies, the local players win because they can enhance their financial strength, add know-how and increase the penetration in the peripherical businesses in oil and gas, working with specialised service providers. The country wins because local taxes will increase as the premiums and revenue are kept to a larger extent by local companies.
In Angola today, health insurance has the largest share, which is more of a benefit for company employees than a premium covering private businesses’ main transactions, assets or operations.
How does Protteja measure against the leading Angolan insurance companies?
We are right now within the 10 largest insurance companies in the country. Our portfolio is 80% corporate, including health and work accidents.
We have a department focusing on big companies. Our customer service advantage relies on business segmentation. We also put key importance on external audits and ARSEG [Angolan Agency for Insurance Regulation and Supervision] reviews, so when a potential client looks at Protteja, they immediately see transparent business references. This is part of our good governance, which allows us to take care of our inefficiencies immediately. Since the beginning, we implemented processes that enable us to quickly adapt to new market conditions in an organic manner.
Our agility and focus on customer needs have attracted many new clients. Hence we are gaining market share from big companies. This has been our main differentiator in comparison to leading insurance companies: they are slower in taking decisions and in providing customer service.
What is Protteja’s strategy to solidify its participation in the oil and gas sector?
Our strategy has three pillars: know-how, financial strength and transparency. We have partnerships with specialised insurance consultancy companies to increase our expertise oriented towards oil and gas operations, vessels and financial operations, including international operators and service providers. This is aimed at increasing our oil and gas client portfolio even more.
Protteja develops business with an umbrella philosophy and a 360-degree view; we look at the business of our clients and the business of their partners. Our goal is to get to know the sector, the needs of each company, and then to create a product that suits the client.
The capacity for risk retention is strictly connected to financial strength. We recently increased our share capital in 2021. Another step in our strategy is to increase our financial capacity by entering the BODIVA stock exchange in 2022, under a package that our stakeholders have already approved.
How important is transparency to clients within the energy value chain?
We have a huge appetite to take more risks and if clients know we have strong financial backing, they will give us this level of business. This is why we need to maintain complete transparency.
For this reason, it makes all the difference to take a company to the stock market, ending all subjectivities and putting all the companies under the same scrutiny. This will put all the relevant information into the public domain: who our shareholders are and how we manage our business. This kind of initiative makes a huge difference in business negotiations by increasing market confidence.
How is the Angolan government working to increase the insurance sector’s competitiveness?
First, the government has provided more transparency within the law of public procurement, as today we no longer have a monopoly in the insurance sector. Up until 2019, [the national insurer] ENSA had a monopoly over public contracts.
During the last two years, executive powers in the Angolan government have made great efforts to attract foreign investment through multiple decrees that help Angolan companies gain more credibility in the eyes of international investors.
The real challenge now is to enforce these laws. Angola also has to align its policies with international standards, corporate governance, good business practices and more. This will make communication and co-operation much smoother, enabling local companies to partner with international players and multinational reinsurers. ARSEG is very attentive to this.
How will the liberalisation of the insurance sector impact market penetration and general revenue?
As monopolies break, we can see which companies are truly organised and prepared to operate in the market. Other than that, the larger the number of companies operating in the market, the greater the chances there will be more information available. Therefore, the level of consciousness will also be higher. Having said that, we believe that there will be more people and companies willing to insure themselves and their properties in order to minimise or mitigate their risk, passing those to the insurance companies, which in turn will increase the level of revenue.
As an example, Angola’s banking sector went through a similar process, shifting from having two protected banks to having 19. This increased the number of customers, and therefore the accounts, hugely.
Monopolies should exist only for a short period, only to provide the sector with essential conditions to start and perhaps to consolidate – and then it must be opened up. Right now, the insurance penetration in Angola is just 2%, and the sector’s contribution to the national GDP is minimal.
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