Insurance and Financing in the Transport Sector

Si Salifou TRAORE

Administrator General

SOGERIS S.A.

ACCRA BORDERLESS 15/03/2013

Henry FORD

Henry Ford: « New York was not built by men but by insurers »

Without insurance, there would be no skyscrapers because no

worker would accept to work at such a height, risking a fatal fall

and leaving his family in misery.

Without insurance, no capitalist will invest millions to build similar

buildings that a simple butt of a cigarette could reduce to ashes.

Without insurance, no one would drive. A good driver is aware

that he risks at every moment to crash into a pedestrian.

WITHOUT INSURANCE, NO TRANSPORT

15/03/2013

GENERAL SITUATION

The contribution of insurance to the GDP of ECOWAS is weak – less than 1%

The penetration of insurance into the population is weak – less than 1%

General defiance regarding insurance

The involvement of insurers in decisions regarding financing is weak

High risks despite very significant potential

Absence of a systematic, concerted and continual approach between insurers and bankers in the search for a solution to the mastering of risks

Absence of an institutional approach to the management of risks

Consequence: The rate of change for banks and insurance companies is too slow to incite efforts to address the challenges on a national or regional level.

15/03/2013

Insurable Risk Mapping

- Transport risks: accidents,

- Risks linked to transported cargo: fire, theft

- Risks linked to warehousing: fire, water damage

- Risks of responsibilities of agents along the transport valuee

chain: transporter, shipper, handler, stevedore, dispatcher, etc.

- Risks lined to people: death, injury

- Financial risks: insolvency, deposit, operating loss

Finance programs do not sufficiently consider the role

of insurance notably for the management of financial

risks.

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What we propose

Modeling and Structuring in order to master the risks and

fully exploit the potentials, creating new opportunities to

reinforce the development of existing activities..

A new relationship between the bank and the insurer

based on the sharing and management of the collective

risks

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Roles of Banks and Insurers

INSURERS BANKS

Insure maritime transport

Grant funding

Insure transport locally

Insure the imported good

Insure warehousing locations

Secure the payment flows on behalf of

the insurer

Financing guarantee

Transfers and collateral

Transfers and collateral pledged to the

insurer

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Key points of finance measures

Insurance due to defaul on payment for insolvency

Deposit or Insurance of the deposit

Other insurance

Advantages for the borrower :

Better management of risks

Lowering of interest rates

Higher volume of credit awarded

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Example of structured finance in

Burkina Faso Truck fleet renewal for transport of petrol products

120 trucks financed at 90 millions FCFA /per truck

Partner Bank: Bank of Africa

Insurer: ALLIANZ / courtier SOGERIS

Unique contract, including :

- Financing at a reduced rate over 5 years

- Truck insurance during the period of the loan

- Insurance of fuel

- Deposit from Total

- Trucks as collateral

- Closed contract for delivery of petrol to Total

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SOME NOTES

◦ ECOWAS BROWN CARD: a managment instrument for claims

at the regional level for vehicles, although with some

implementation difficulties in certain countries.

◦ CODE CIMA : Regional law regulating the insurance practice in

the Member States of CIMA with difficulty for countries outside

of the CIMA zone.

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Summary

Integrate insurance and banks

Innovative financial measures/products

THANK YOU FOR YOUR ATTENTION

15/03/2013