Sierra Leone’s promising mining industry has driven growth of the country’s overall economy. While this will boost the demand for insurance products, there is a long way ahead for an industry that is still underdeveloped and inadequately supervised.
Up until 2010 iron ore production in Sierra Leone was minimal. With the discovery of new deposits in 2011, the country is expected to become one of Africa’s largest iron ore producing countries by 2017. The growing mining industry will require a large labor force, and according to a new report from Timetric this will lead to increased demand for employer liability insurance over the next five years. This comes as great news for the country’s insurers at a time where the industry is struggling with a number of challenges including low penetration rate, rising unemployment, and a weak regulatory framework.
Inadequate supervision of insurance authority
The major concern for the insurance industry is inadequate regulation, which needs to be more focused, coherent, and in line with international best practices. The weak regulatory framework is also the reason behind the underdeveloped nature and low penetration of insurance.
The Sierra Leone Insurance Commission (SLICOM) is responsible for the supervision and licensing of insurance companies, brokers, loss adjusters, and agents in the country. However, the industry does not provide SLICOM adequate data on its financial condition. In addition, SLICOM is also running too low on resources to justify its role in dealing with important stability issues like possible insolvency. It also has a shortage of professional staff, adequate training, manuals, analytical tools, and technology. Today there are eight insurance companies and six brokers operating in the country, however some of these companies only started their operations recently and currently do not contribute a significant amount of revenue to the industry.