According to Finscope 2016 survey 89% of adult population are financially served through formal and informal mechanism. Despite this tremendous growth, Rwanda’s insurance penetration is still low as only 9% of the adult population have access to insurance and this is below the globally recommended standards.
The Rwanda Financial Sector Development Program (FSDP) II recognises the need to increase access to financial services in Rwanda particularly insurance and pension services to enhance and increase long term savings as a key poverty reduction strategy. One of the FSDP II priority actions in line with this goal is to develop Rwanda-specific mortality tables (also known as life tables).
Rwanda has all along been using mortality tables developed in 1960-1964 for Europe or East and Western Africa. Given significance of mortality tables or actuarial statistics on life expectancy to gauge the pricing of premiums for life insurance products, the Ministry of Finance and Economic Planning (MINECOFIN), the National Bank of Rwanda (BNR) in collaboration with the Insurers Association (ASSAR) and Access to Finance Rwanda (AFR) with support from Callund Consulting Limited in partnership with the Longevity Team at Barnett Waddingham LLP in the United Kingdom developed mortality tables for Rwanda from October 2016 to March 2017.
This is a great milestone for Rwanda as these tables will ensure that life and annuity products are accurately priced and premiums are well calculated in the Rwandan life insurance and pensions sectors.
What benefits should be expected from the newly developed mortality tables?
The Rwandan mortality tables have been produced based on data supplied by Rwanda Social Security Board (RSSB) for the years 2012-2016. The tables are used by insurance companies for pricing and reserving life assurance products as well as by pension funds in order to manage their liabilities.
These mortality tables will help develop insurance market by:
As best practice Rwanda Mortality Table should be periodically reviewed (three to five years) in order to monitor any developments in life expectancy over time.
The writer is the Director of Programmes for Access to Finance Rwanda (AFR) and he heads the Inclusive Insurance Market Development pillar