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Insurance
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Insurance Sector

Since 2004, as per the Law No. 71/AN/04/5th, the insurance sector in Djibouti has been upgraded to match the standard of international insurance markets, both in terms of organisation and functioning at the regulatory level. The state reserves the right to investigate and verify the compliance of insurance company accounts as well as to assess their creditworthiness. The regulation provides at least 50% of capital for domestic investors and prohibits the relocation of risks and introduces the domiciliation of insurance on imports.

Djibouti adheres to the COMESA Yellow Card Scheme since 2003. The Yellow Card Scheme links a regional network of automobile liability insurance companies which provide all the guarantees required by the regulations in force in participating countries to address the problem of compensating victims of road accidents caused by vehicles in transit.

Market Potential

In emerging economies, economic development generally comes with an increase of coverage demand or warranties related to non-life insurance operations (damage of properties and civil responsibility), but in developed countries, such demand is related to personal insurance (retirement, health, and providence scheme). In Djibouti, compulsory car insurance holds a dominating position in the market, while life insurance remains marginal and is limited to loan insurance that banks require before granting credits. The insurance market is operated by two insurance companies, namely AMERGA and GXA.

This market should allow for the development of personal insurance such as life insurance or health insurance, and produce long-term savings, which can help to further finance the economic development of the country. On the macroeconomic level, insurance companies and institutional investors will contribute to the financing of socio-economic development. The insurance system in Djibouti works without intermediaries, which means that acquisition costs and problems related to the relationship between insurer and intermediary (including the management of premiums and the liability to the insured) are avoided. Management costs are therefore reduced to operating costs and acquisition costs are slight.