Cameroon: Insurance Brokerage at the Crossroads in Central Africa

By Shout-Africa Cameroon Correspondent – Experts fear the proposed brokerage could end up weak and weakened with the fall in sales that the new proposal entails.

The decision of the Council of Insurance Ministers, CMA, in its final communiqué at the end of its sitting to study draft modifications of Article 13 of Book 1 of the CIMA Code and Articles 541-542 and 544 last April 11, 2011, in the Chadian capital, N’Djamena, raises concerns about the future of insurance trade in the CIMA zone. It harps on successive cash bonuses by intermediaries, the repayment of premiums and commissions.

Christophe Tcheuko Leutchoko, CEO of Cameroon Brokers Company, SOCAC, Douala, notes: “Our concern is explained by the fact that the analysis of the decision of the CMA, if published and applied without revision, the brokerage will be found stripped of all its substance and could be confronted with enormous difficulties, both in its management in practice.” As a reminder, he said the decision of the supreme body of the CIMA is not subject to appeal, but prohibits intermediaries from enforcing its application under provisions of sections 534 (2) and 545 of the CIMA Code, to collect premiums, premiums fractions, and to receive checks. More serious, the decision prohibits intermediaries from receiving commissions on the premium received. Finally, the decision states that the commissions payable to intermediaries shall be paid within 30 days after the giving of premiums to insurance company. Some rules for the operation of a brokerage firm or general agent highlight enormous problems to be faced if the same organs which introduced the changes do not take measures.

The consequences are that the ban on intermediaries to withhold the amount of their commissions on premiums received and the deadline for payment of these commissions are likely to affect the working capital of brokerage firms and the ability of State to provide effective forecasts of Value Added Tax, VAT, receipts to maximize revenues and to address various public offices, the VAT is still the most profitable tax, although the rate of 17 , 5% plus 10% additional taxes and municipal rates are below that in the Central African monetary and Economic Community, CEMAC, which is 20% and is also non-inflationary.

Expert brokers like Tcheuko Leutchoko propose the raising of the level of brokers’ commissions in order to better address the additional costs engendered and application of the decision for the management of CIMA brokerage operations, the imposition of automatic calculation of profit sharing by the companies at year-end to be repaid the broker, as well as the ban on insurers to buy directly from contracts where the premium is less than 1 million to enable intermediaries to maintain the economic health of their structures.