A Strategy To Reforming The Cape Verde Insurance Industry

This project analyses the current situation of Cape Verde's insurance industry, focusing on its gradual development allowing more improvement and flexibility in its service. The goal of the project is therefore, to analyse the potential problems in the insurance market; to highlight recommendations for Capeverdean policy-makers; and to set out a detailed plan of action for innovation of Cape Verde's insurance industry.Cape Verde is graduating from a Lesser-developed country (LDC) to medium-developed country (NDC) status, according to the World Bank, and the W.B. plan for infrastructure development and more foreign investment. This foreign investment has increased very quickly, with a total investment of USD1000 million from 2000 to 2006 and a predicted USD620 million from 2007 to 2011, according to Cape Verde investment statistics. Insurance companies benefit from these investments, and premiums have increased by nearly 12.3 percent annually from 1992 to 2006. Such growth is caused by construction, tourism, and the automobile sectors. This significant growth is also attracting the attention of more foreign insurance and banking investors, even though Cape Verde's insurance market is relatively small.Next year Cape Verde will probably join the WTO. Even though the country's insurance market is open, there remain some commitments the Cape Verde government must fulfil in order to become a member of the WTO. The most important commitments include social welfare reforms and financial reforms. All these reforms I am confident will make Cape Verde's insurance companies more competitive. However, what remains particularly concerning is how domestic insurance companies will stand up against fiercer competitiveness from foreign companies. Welfare reforms are increasing the country's need for a strong commercial insurance industry, although policy-makers remain concerned about how the domestic industry will fare in the face of foreign competition. Experience indicates that foreign participation in the insurance market can help Cape Verde's insurance industry to grow and diversify.With the goal of developing a coherent strategy for regulating the insurance sector in the years to come, this project analyses insurance company products, market and political issues that will need to be accounted for in any innovation effort. These analyses highlight the real impact of foreign participation in the domestic insurance industry and conclude that 1) the overall impact of foreign activity will be positive, and 2) what strategies should be adopted by domestic companies in the near future to improve their competitiveness. This project also outlines the steps Cape Verde policy-makers will need to take in order to be more competitive in the country's insurance industry and in considering what issues need to be adopted, as well as the issues needed to be addressed, implemented and enforced.Finally, this study offers a comprehensive strategy for reforming current insurance policy and the legal framework. The strategy highlights western style legislative measures and public relation building activities that can help Cape Verde's authorities and business community develop more fruitful relations.