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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

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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.
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Insurable Risk Mapping


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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


Insure transport locally Insure the imported good Insure warehousing locations Financing guarantee Transfers and collateral

Grant funding

Secure the payment flows on behalf of the insurer

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

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