Two factors have encouraged the insurance market in Madagascar in recent years to evolve. In 2006 the Malagasy insurance regulator licensed the European insurer Allianz (AGF at the time) and the African Colina to open subsidiaries on the island.  Shortly afterwards, in mid-2008, the same authorities allowed insurance brokers to start operating.

By 2008 Allianz and Colina had a combined market share of nearly 12%, while ARO and Ny Havana, both state-owned companies had market shares of over 50% and 20% respectively.

The advent of the brokers has resulted in all insurers being asked to quote for much of the business.  Under the old regime ARO tended to write corporate business while Ny Havana wrote most individual business. Brokers have also been blamed for pushing premium rates down.

One peculiarity of the Malagasy insurance market is the case of the mutual, Mutuelle d’Assurance Malagasy (MAMA).  It specialises in motor third party insurance, especially for taxis and privately owned minibuses.  Until a few years ago, MAMA did not pay any claims.  Repeated efforts, such as appointing an administrator and forcing through a premium rate increase, have slightly improved matters, and some insurers say that MAMA now occasionally pays claims. 

The insurance authorities have not felt able to take stronger action because of the dangers of a political backlash.  To bring MAMA’s rates to levels that would enable the company to pay claims as well as its various operating expenses would entail increasing premiums by, say, 50%; that would lead to protests.

The political dangers should not be underestimated.  Only last year protests against the closure of a vociferous opposition radio and TV station led to violent clashes in which hundreds were killed; before long part of the army had mutinied and the legally elected president was forced into exile. 

The finance ministry issued a decree ordering insurers to pay for the property damaged during the clashes, even though they had insured the property under a standard clause, advocated by the African insurers’ association, FANAF, which excludes politically motivated events.  Insurers resisted the decree.  They now offer cover that includes politically motivated events, but at twice the price.

Axco’s Insurance Market Reports on Madagascar are in production.  They will be published in the first quarter 2010.