The cell captives have the potential to help address some of the structural constraints faced by many insurance markets in sub-Saharan Africa, according to a report published by Cenfri.
The report suggested that a cell captive could be used as a driver of innovation in retail insurance, an enabler of specialised or niche risk cover, a tool for insurance market participation and a vehicle for promoting the development of offshore financial hubs.
It provided examples of those countries in sub-Saharan Africa that have already introduced the cell structure, such as Mauritius, where cell captives have successfully been leveraged for first-party insurance, and South Africa where they have demonstrated their ability to drive retail innovation and provide an entry path into the insurance market.
Namibia and the Seychelles have also developed preliminary regulation, while others are currently exploring potential use cases for the cell captive structure in their jurisdictions.
In the report, Cenfri said: “We find that cell captives have the potential to address key insurance market challenges in sub-Saharan Africa at both the corporate and retail insurance levels, thereby supporting the inclusive development of insurance markets across the region.”
The report suggested that realising the true value of the cell captive structure requires “a clear regulatory framework to support its adoption and implementation in a way that is appropriate to the specific local context”.
In addition, it explained that regulators that are currently considering the introduction cell captives should “be guided by the primary policy objective or use case that the cell captive structure will address”.
It said: “This will determine the risk transfer strategy that is most suitable for their market context and the regulatory framework components needed to support local cell captive business.”
