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Industry roundup: 7 December

Cyber captives “will take off in 2022”

In the face of a continuing difficult cyber insurance market, the coming year will see buyers looking for alternative risk transfer solutions, with captives topping the list, predicts specialist insurance intermediary New Dawn Risk

James Bullock-Webster, the firm’s head of tech, media and cyber writes that the cyber market has continued to harden throughout 2021, with rates increasing by between 40% and 200%. Meanwhile, carriers are routinely dropping their limits by as much as half and maintaining the same premiums – in effect doubling rates.

As recently as 18 months ago, many single carriers offered a primary limit of US$10 million, but US$5 million is now the absolute maximum. Meanwhile, capacity is limited, which is significantly disadvantaging first time cyber buyers or business wanting to move to London, as insurers are reaching their premium income allocation just by their renewal book.

The outlook is also not encouraging, with a general consensus in the market that the hardening is set to continue into 2022 and 2023

Bullock-Webster says that although syndicates will reload on January 1, providing an opportunity to write more business “they will probably be very reluctant to go out of the gates too hard because they don't want to end up overshooting their allocation and having to put their pens down part-way through the year.

“In the coming year we will reach a point where some larger clients no longer see the value in transferring their exposure to the insurance market. They will decide the time has come to self-insure by setting up a new, or extending the use of an existing, captive – a wholly-owned subsidiary created to provide insurance.”

He adds that setting up a captive has historically only been a realistic option for large multinationals, due to the significant cost involved, not least in capitalisation and collateral requirements. However, the increasing availability of cell companies is opening up captive solutions to a wider world. The lower barriers to entry involved with cell captives mean a simpler and more cost-effective alternative.

“Companies of all sizes looking for cyber insurance will no longer be at the mercy of a fluctuations in appetite and rate and will opt to do it themselves,” concludes Bullock-Webster.

Standard Chartered opens first digital branch in Tanzania

Standard Chartered Bank Tanzania has launched the country’s first digital bank branch in the Mikocheni area of Dar es Salaam, which was formally launched by the Deputy Governor of the Bank of Tanzania (Financial Stability and Deepening), Dr Bernard Kibesse.

The bank's CEO, Sanjay Rughani, said that the digital branch was the first of its kind in Tanzania and will enable customers to perform a varierty of self-banking services.

To supplement the new digital branch, Standard Chartered Bank also launched agency banking titled “Standard Chartered Wakala”.

“Digitisation remains at the heart of our business strategy. We have always been a digital bank, and constantly work to advance our digital banking capabilities that meet our clients' demands, and promotes socioeconomic development,” said Rughani.

Standard Bank sees boost to Africa’s sugar trade from AfCFTA

Standard Bank expects the many expected benefits of the Africa Continental Free Trade Agreement (AfCFTA) to extend to Africa’s sugar industry.

Brokered by the African Union and signed by 44 of its 55 member states in March 2018, AfCFTA aims to remove tariffs from 90% of commodities, goods and services across the continent. By 2022, the United Nations Economic Commission for Africa expects the agreement to have boosted intra-African trade by 52%.

However, Standard Bank comments that levels of intra-Africa trade are still low, with the continent as a block conducting more trades externally than it does internally. For example, intra-African trade stands at less than 20%, compared with 59% for Asia and 68% for Europe according to the World Economic Forum (WEF).

Sugar manufacturing has historically faced intra-African country barriers and the bank says that it is hopeful that AfCFTA’s implementation will foster industrial and trade policies that create a unique opportunity for growth in Africa’s sugar market within the continent.

“Sugar is one of the sub-sectors of agriculture with linkages throughout the economy and at Standard Bank we are supporting the entire value chain with the aim of driving sustainable growth within the industry and that of the wider agricultural ecosystem on the African continent,” says Yinka Sanni, chief executive of Standard Bank Africa Regions.

“Our strategy remains as follows. Africa is our home, we drive her growth and the agricultural sector, with its massive social and economic footprint, is key to unlocking this growth.”

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