The Insurance sector risk score (ranging from 0 to 15) is a key factor in the operating environment component score. The core of the GCR Ratings Framework is based on GCR’s opinion that an entity’s operating environment largely frames its creditworthiness. As a result, the operating environment analysis anchors the underlying risk score for the GCR rating methodology. GCR combines elements of the country risk and sectoral risk analysis, blended across countries for entities operating across multiple jurisdictions, to anchor an insurer to its current operating conditions. For more details on any of the above, please read the related criteria and research listed below.
GCR will periodically publish updated “Insurance Sector Risk Scores”, which will supersede previous publications. The publication titled “GCR Insurance Sector Risk Scores, 05 November 2019”, available at https://gcrratings.com/risk-scores/, supersedes the article published on 30 July 2019.
Rwanda Insurance Sector Risk Score
Republic of Rwanda, Sector Risk Score 3.25. Country Risk Score 4.25*, Mapping Table 4.0 to 4.5
Rwanda’s sector risk score reflects a fair level of insurance penetration and healthy market growth, while very low levels of transparency moderate GCR’s view of the regulatory environment despite remarkable progress in implementing a Risk Based Solvency regime. The market’s insurance penetration is estimated at 1.7%, surpassing that of several regional peers, although insurance density is within the low ranges, at USD13 per person. Nonetheless, insurance density is expected to gradually creep up given a healthy average real annual growth rate of between 5% and 10%. Strong enforcement of regulations, offsetting very low industry data transparency, ensured moderate success in implementing cash and carry premium regulations and the current parallel run on the Risk Based Solvency model. These regulations are expected to reduce earnings risk, largely caused by soft motor rates and the impact of a high minimum wage on accident claims, resulting in persistent underwriting losses among private players in the market. While this is somewhat balanced by the more profitable public sector, earnings risk is viewed to be moderately high. In order to manage price based competition, the regulator issued a moratorium on new insurance players, escalating barriers to entry to a high level. The market’s financial sector risk score is viewed to be negative.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.