The development of Angola’s insurance sector

Angola

Alexandre Carreira, executive director and CEO of NOSSA Seguros, talks to The Energy Year about the company’s key strategic and operational projects in 2023, how its involvement in the energy sector has evolved in recent years and the new Angolan insurance laws. NOSSA Seguros is an insurance provider.

What were the key strategic and operational developments for NOSSA Seguros?
With a great focus on customer needs and experience, we worked on projects to revise our value proposition (our offer of products and services by segment and distribution channel). We also worked on a customer loyalty and retention programme as well as on the improvement of the customer journey through the automation of critical business processes.
I also would like to highlight that we did projects to assure compliance with the best international practices and worked on our cultural transformation programme. We developed new IT solutions to improve customer experience, adding convenience for our clients who prefer to have remote interactions with us.
For instance, we focused on the automatic dispensation of documentation to clients, as well as on electronic payment solutions, including direct debit. We also launched new products. For example, we launched life and health insurance products for the lower-income customer segment, as well as a health product for senior citizens.

How has the involvement of NOSSA Seguros in the energy sector been evolving in the past years?
In the energy sector we are already a relevant player. We have been involved in important projects in hydropower, renewables and thermal energy. We are mostly involved in projects to develop energy infrastructure.
We have also been involved in providing insurance to the companies in the energy sector. Our perspective for the future is based on the expansion of access, the economic growth prospects of the country and its energy needs, as well as on the country’s need to implement its energy transition strategy. We understand that less than 50% of people in Angola have access to energy.
Due to the large size of the territory, it makes sense to develop off-grid solutions with renewable sources of energy. Angola is a country with a very high potential for economic growth, and we also understand that it is well positioned to be an important international supplier of energy. We are positioning ourselves to be a part of this story of expansion.
Regarding insurance in the energy transition context, NOSSA has been part of the dialogue between the international insurance market and our local clients to guarantee that the transition occurs smoothly and that our local clients don’t fall behind in executing the adaptations their business models need for them to remain insurable.

How are new laws and regulations going to affect the insurance market in Angola?
In 2022 the government approved a new insurance and reinsurance law. It establishes rules for governance, reports, financial guarantees, people in certain management and control positions and microinsurance.
In terms of governance, the new law requires many things that are fundamental for our activity that were long overdue. These include that companies should have risk management, internal auditing, compliance and actuarial functions. With the new law, companies are also required to implement risk management and internal control systems.
Reserves are very important in insurance companies because we as insurers need to make the necessary provisions to meet our insurance claims obligations. The law does well to clarify the reserves for the insurance industry.
This new law also has rules on microinsurance, which are very relevant considering the low-income characteristics of the country. For instance, the law allows the establishment of microinsurance companies.
It is expected that the new insurance and reinsurance law will promote healthy competition, the stability of the sector and protection of the insured. Therefore, it might improve the confidence of investors in the sector by lowering risks and helping to increase the demand for insurance solutions.

What are the key challenges that the implementation of the new legislation might bring?
These new requirements will demand that companies have professionals that can handle these new rules. Companies will need actuaries and other professionals that we don’t find very easily in Angola.
Furthermore, companies will have to invest in IT systems. These systems must be at world standards. We will have to implement a new chart of accounts just to reflect these new rules. We will experience challenges, but I think some companies are much better prepared than others.
Furthermore, the law is not very detailed, so the idea is to have some regulation coming after the law. We are still waiting for a substantial part of the regulations that will embody all these reforms, and this also represents a challenge.
The enforcement of the law may also be a challenge for the regulator. ARSEG (our regulator and supervisor) must ensure that they have the resources to supervise the more than 20 companies that comprise the industry.

How are distribution channels evolving for NOSSA Seguros?
Basically, we have three distribution channels: direct, brokers and bancassurance. Historically, our direct channel has generated the greatest revenue. Then we have, in terms of importance, brokers and bancassurance (in that order).
However, all the channels have been very important factors for our growth and our business model. In fact, we can clearly observe a trend over the years in which brokers and bancassurance have increased their share of the revenues at the expense of our direct channels.
In 2023 the distribution of our revenues by channel was as follows: 54% from the direct channel, 34% from brokers and 12% from bancassurance. Compared with the previous year, the direct channel lost 3 percentage points (pp) at the expense of an increase of 1 pp by brokers and 2 pp by bancassurance.
Within our direct channel, we have our contact centre and our mobile application. Our contact centre, which facilitates all interactions with clients by telephone, is already an important channel with a very notable annual rate of growth. Our app, which has very interesting features, is slowly affirming itself in the market.

What are the key strategic priorities for NOSSA Seguros in the next five years?
Our strategic cycle ends in 2023, and we haven’t yet decided the strategic pillars for the 2024-2027 cycle. However, I believe that some of the themes that we’ve been working on presently are still going to be relevant in the next cycle.
For instance, we have been working on the client experience and satisfaction. I believe that will remain relevant going forward. Among other things, we will certainly continue our quest for making our product offering more relevant and adapted to our market.
The incorporation of technology in our business processes will certainly remain relevant. Corporate culture, risk management and compliance, no doubt, will also remain important themes.

What is the vision of the future for NOSSA Seguros?
We want to participate in the transformation of the insurance market in Angola by making it more inclusive and innovative and by improving the quality of services. We want to lead this transformation. This is a market with more than 20 companies. Therefore, the challenge that we impose upon ourselves is huge, but we are not giving up.
In the energy sector, we’d like to be a much more relevant player. With respect to oil and gas, we hope that the law changes so that the market becomes more competitive, and we are allowed to compete to lead the co-insurance regime.
Not all Angolan energy infrastructure is being insured with the local insurance companies, and we suspect that an important part of this infrastructure has no insurance at all. We hope this situation changes soon, and we think our company is well placed to play an important role in this transformation process. The future is promising since the potential for growth is enormous.

Read our latest insights on:

• Angola