Financial Inclusion

Africa Re is actively involved in global financial inclusion initiatives. In the insurance sector the two key interventions aimed at promoting inclusion are Microinsurance and Takaful financial services.

Treaty Reinsurance

A treaty reinsurance is a type of reinsurance where an insurer (referred to as the ceding company) enters into an agreement with one or more reinsurers in order to cede to them a portfolio of risks, as defined in the respective reinsurance agreement or treaty. In such an agreement, the ceding company agrees to cede and the reinsurers agree to accept all the risks written by the ceding company that fall within the terms of the treaty, subject to the limits specified therein. Treaty reinsurances can be in the form of either proportional or nonproportional treaty reinsurance. In simple terms, the proportional treaties are intended to provide capacity while the non-proportional are designed to protect the risks retained by the reinsured entity. The most common forms of proportional treaties include Quota Share, Surplus and Facultative Obligatory treaties. For non-proportional types, the principal types include Risk Excess of Loss, Catastrophe Excess of Loss and Aggregate Excess of Loss treaties.


In territories that follow Islamic legal system, there are concerns with the certain aspects of traditional financial services, specifically the practice of charging interest of loans; and gambling, or the business of taking of risk, or speculation on uncertainty. There is thereby concern about the role of an insurer in an insurance contract, if it depends mainly on risk as its purpose of doing business.

To address these concerns, financial systems have been developed that to comply with this belief system. In insurance, the key change is an approach of risk sharing instead of risk transfer. When risks are shared in a pool, both parties are supposed to share costs of claims suffered, and jointly benefit from profits arising from the undertaking. This form of insurance, which is intended to comply with rules of Islam, is known as Takaful. In order to provide appropriate reinsurance support for this area, Africa Re established the Africa Retakaful subsidiary, based in Cairo, Egypt.

Microinsurance Business

Microinsurance can be defined as ‘the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved’. Africa Re is involved in several initiatives aimed at promoting the development of microinsurance in Africa. Africa Re plays an active role in the research and development of products, as well as the provision of reinsurance capacity. Furthermore, Africa Re has also formed a partnership with the International Labour Organisation in order to support development of microinsurance.

The principal types of microinsurance business are as outlined in the diagram below:

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