Cameroon is part of the Central African Economic and Monetary Union (CEMAC), which shares a common insurance regulatory and supervisory authority - the Inter African Conference for the Insurance Market (CIMA). In 2000, the International Monetary Fund (IMF) conducted a Report on the Observance of Standards and Codes in Cameroon based on the 2000 International Association of Insurance Supervisors (IAIS) methodology. According to the report, although the regulatory and supervisory framework had been considerably strengthened in Cameroon through the adoption of the CIMA Code in 1995, there were important shortcomings with regards to the supervisory practices of the Regional Commission for Insurance Supervision (CRCA), which is the regulatory body of the CIMA. As noted in a 2002 IMF Financial System Stability Assessment (FSSA), although the CRCA is fairly transparent, it lacks adequate resources and relies on national supervisory agencies, leading to problems of conflict of interest and lack of political independence. Furthermore, according to a 2006 IMF FSSA on the CEMAC region, weaknesses remain in the area of reinsurance and prudential rules. Cameroon is not a member of the IAIS, and there is insufficient publicly available information regarding Cameroon's compliance with the Insurance Core Principles (ICPs) as revised by the IAIS in October 2003.

General Overview

In 2000, the International Monetary Fund (IMF) conducted a Report on the Observance of Standards and Codes (ROSC) on insurance supervision in Cameroon based on the 2000 International Association of Insurance Supervisors (IAIS) methodology. Cameroon is part of the Central African Economic and Monetary Union (Communauté Economique et Monétaire de Afrique Centrale, or CEMAC), which shares a common insurance regulatory and supervisory authority - the Inter African Conference for the Insurance Market (Conférence Inter-Africaine des Marchés d'Assurance, or CIMA). The Regional Commission for Insurance Supervision (Commission Régionale de Contrôle d'Assurance, or CRCA) was founded in 1992 as the regulatory body of the CIMA, and its actions and decisions are transmitted by the National Insurance Directorates (Direction Nationale des Assurances, or DNA). According to the 2000 IMF ROSC, although the regulatory and supervisory framework has been "strengthened considerably" in Cameroon through the adoption of the CIMA Code in 1995, there are important shortcomings with regards to the supervisory practices of the CRCA. As noted in a subsequent 2002 IMF Financial System Stability Assessment (FSSA) on Gabon, which is also a member state of the CIMA, the CRCA is fairly transparent, but is characterized by "serious staff shortages and reliance on national supervisory agencies" (p. 40), leading to problems of conflict of interests and lack of political independence. The CRCA also has a rigid structure, and low overall budget and salaries. As stated in a 2006 IMF FSSA on the CEMAC region, responsibilities between the regional supervisor and national insurance authorities are not clearly delimited, reinsurance activities of insurance companies are not monitored by the supervisory authority, and weaknesses remain in the area of prudential rules. The IMF report recommends increasing the independence, staffing and capacity of the supervisors, and updating the regulations.

Cameroon is not a member of the IAIS, and there is insufficient publicly available information regarding Cameroon's compliance with the Insurance Core Principles (ICPs) as revised by the IAIS in October 2003. As noted in the 2006 IMF FSSA, the CIMA supervises member states from both the CEMAC and the West African Economic and Monetary Union (Union Economique et Monétaire Ouest Africaine, or WAEMU). According to a 2006 IMF FSSA, three quarters of the insurance companies in the CEMAC region are established in Cameroon and Gabon. Although the insurance sector is underdeveloped with premiums accounting for less than 1 percent of GDP, the number of insurance entities in the CEMAC countries has increased from 29 in 2002 to 36 in 2006, stimulated by low capital requirements.

The Principles

ICP 1 Conditions for effective insurance supervision

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 2 Supervisory objectives

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As noted in a 2002 IMF Financial System Stability Assessment (FSSA) on Gabon, the supervisory objectives of the CRCA are clearly defined in the CIMA Treaty. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with this principle.

ICP 3 Supervisory authority

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Cameroon is part of the CEMAC region, which shares a common insurance regulatory and supervisory authority - the CIMA. The CRCA was founded in 1992, as the regulatory body of the CIMA, and its actions and decisions are transmitted by the DNAs. According to the IMF's 2000 ROSC, ICP 1 on Organization of an Insurance Supervisor was only "broadly compliant" due to insufficient staffing and financial resources of the CIMA. As noted in a subsequent 2002 IMF FSSA, although the CRCA is fairly transparent, it is characterized by "serious staff shortages and reliance on national supervisory agencies" (p. 40), leading to problems of conflict of interests and lack of political independence. The CRCA also has a rigid structure, and low overall budget and salaries. Furthermore, its staff is not adequately protected under the law. The 2002 IMF assessment recommended that Cameroon "redesign the membership structure of the expert committee and CRCA to eliminate... conflicts of interest and increase CRCA's independence from political influence" (p. 48). It further advises an increase the CRCA's budget and additional funding for supervisors. A legal framework for the formal protection of CRCA's staff should also be introduced. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 2 on Supervisory objectives

ICP 4 Supervisory process

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In its 2003 FSA, the World Bank recommended developing "more transparent and formal supervisory processes with automatic triggers to impose sanctions" (p. 7). Nevertheless, there is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 5 Supervisory cooperation and information sharing

II

In its 2000 ROSC, the IMF advised the CRCA to establish regular contacts and share information with insurance supervisors outside the franc zone in order to improve its insurance and licensing activities. Nevertheless, there is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 6 Licensing

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According to the IMF's 2000 ROSC, ICP 2 on Licensing was divided into three sub-categories. Cameroon was "fully compliant" with the two first categories - general licensing and fit and proper testing. On the other hand, it was only "broadly compliant" with the third category - reliance on other jurisdiction - due to a lack of regular contact with other jurisdictions. The IMF report advised establishing regular contacts with insurance supervisors outside the franc zone. As noted in a subsequent 2002 IMF FSSA on Gabon, licensing of insurance companies in the CIMA region is country specific. Furthermore, "fit and proper testing" of owners is not formally conducted, and owners are more strictly monitored for changes in control than during the licensing process. The 2002 IMF assessment recommended allowing insurance entities to operate in several countries of the region without multiple licenses. Licensing regulations related to "fit and proper testing" of owners also need to be harmonized, and the DNAs should control the source of funds in the licensing process. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 6 on Licensing.

ICP 7 Suitability of persons

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 8 Changes in control and portfolio transfers

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According to the IMF's 2000 ROSC, Cameroon was "fully compliant" with ICP 3 on changes in control. The IMF report noted that transfers could not take place without the authorization of the Ministry of Economy and Finance (Ministère de l'Économie et des Finances, or MEF), and support of the CRCA. As noted in a subsequent 2002 IMF FSSA on Gabon, the CRCA lacks powers to control outsourcing contracts. Owners are also more strictly monitored for changes in control than during the licensing process. The 2002 IMF assessment recommended harmonizing the regulation on changes in control with regards to "fit and proper testing". However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 8 on Changes in control and portfolio transfers.

ICP 9 Corporate governance

II

According to the IMF's 2000 ROSC, ICP 4 on Corporate governance was "materially non-compliant" due to a lack of rules in the 1995 CIMA Code with regard to board responsibilities in practicing good governance. Furthermore, committees from board members have not been established to ensure proper market conduct. The IMF report, however, questioned the relevance of these regulations for Cameroon. As noted in a subsequent 2002 IMF FSSA on Gabon, the CRCA still lacks sufficient powers in the area of corporate governance. The 2002 IMF assessment suggested requiring companies to hire independent advisors, as well as internal auditors. Nonetheless, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 9 on Corporate governance.

ICP 10 Internal control

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According to the IMF's 2000 ROSC, ICP 5 on internal control was "materially non-compliant" due to the absence of internal controls in Cameroon. Furthermore, committees from board members have not been established to ensure internal controls. As noted in a subsequent 2002 IMF FSSA on Gabon, the CRCA still lacks sufficient powers in the area of internal controls. The 2002 IMF report suggested putting in place procedures manuals. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 10 on Internal control.

ICP 11 Market analysis

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 12 Reporting to supervisors and off-site monitoring

II

Cameroon is "fully compliant" with ICP 12 on financial reporting, and no further corrective action is required, as noted in the 2000 IMF ROSC. However, according to a subsequent 2002 IMF FSSA on Gabon, the "frequency of financial reporting does not allow the conduct of effective off-site inspection" (p. 47) and there is a lack of accounting and actuarial standards in the CIMA region. As stated in the same report, a new software package is being developed by the CRCA to improve the flow of information between the CIMA and NDAs. The 2002 IMF assessment advised an increase in the frequency of financial reporting. However, the IAIS revised the ICPs and the Methodology in 2003, and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 12 on Reporting to supervisors and off-site monitoring.

ICP 13 On-site inspection

II

According to the IMF's 2000 ROSC, ICP 13 related to on-site inspection was "broadly compliant." The IMF report recommended increasing the staffing and resources of the CRCA, and improving "human and financial follow up procedures." However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 13 On-site inspection.

ICP 14 Preventive and corrective measures

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 15 Enforcement or sanctions

II

Cameroon is "fully compliant" with ICP 14 on sanctions and no further corrective action is required, as noted in the 2000 IMF ROSC. According to a subsequent 2002 IMF FSSA on Gabon, there is a lack of monetary sanctions and automatic triggers for the imposition of sanctions in the CIMA region. Furthermore, sanctions are limited to "the revocation of license once the company has a deficit in the coverage of liabilities or does not pass the solvency test" (p. 48). The 2002 IMF assessment advised Cameroon to "introduce automatic triggers for the imposition of sanctions ... and develop a manual for the imposition of monetary sanctions" (p. 49). In its 2003 FSA, the World Bank also recommended developing "more transparent and formal supervisory processes with automatic triggers to impose sanctions" (p. 7). However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 15 on Enforcement or sanctions.

ICP 16 Winding-up & exit from the market

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 17 Group-wide supervision

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 18 Risk assessment and management

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There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 19 Insurance activity

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According to the IMF's 2000 ROSC, "reinsurance of large risks is essential for insurance companies operating in Cameroon." However ICP 10 on reinsurance was "materially non-compliant" due to the CRCA's lack of information on reinsurance companies, and contact with foreign authorities. The IMF report recommended closely monitoring reinsurance contracts, gathering information on the financial condition of reinsurance entities, and establishing regular contacts with insurance supervisors outside the franc zone. Under the 1995 CIMA Code, as noted in the 2003 World Bank FSA on Gabon, the supervisory authority still lacks powers to monitor reinsurance activities of insurance companies. The 2002 IMF report recommended authorizing the CRCA to supervise reinsurance companies and their activities. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 19 on Insurance Activity.

ICP 20 Liabilities

II

As stated in the IMF's 2000 ROSC, ICP 7 on liabilities was divided into three sub-categories. Cameroon was "broadly compliant" with the two first categories - general liabilities and technical provisions - due to the absence of "requirement for actuarial evaluation of liabilities," and adequate verification techniques. On the other hand, it was only "partially compliant" with the third category, reinsurance credit, due to the CRCA's lack of practice in reviewing reinsurance activities. At the time of the assessment, the CIMA Code did not require that "mathematical provisions for life insurance policy liabilities be computed and certified by a qualified actuary." As noted in a subsequent 2002 IMF FSSA on Gabon, this issue is still pending. Furthermore, liabilities cannot be covered by assets outside of the CIMA region. The 2002 IMF report recommended allowing non-CIMA countries' assets to cover liabilities, However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 20 on Liabilities.

ICP 21 Investments

II

According to the IMF's 2000 ROSC, ICP 6 on Assets was "partially compliant" due to a lack of requirement for an investment policy statement from the board of directors, as well as rules related to safekeeping. As noted in a subsequent 2002 IMF FSSA on Gabon, there is a lack of investment opportunities in the CIMA region. Furthermore, provision levels do not adequately reflect risks in the life insurance sector. The 2002 IMF report recommended ensuring technical provisions that cover the evaluation of future risks. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 21 on Investments.

ICP 22 Derivatives and similar commitments

II

According to the IMF's 2000 ROSC, ICP 9 on Derivatives and off-balance sheet items is not applicable to Cameroon.

ICP 23 Capital adequacy and solvency

II

Cameroon is "fully compliant" with ICP 8 on capital adequacy and solvency and no further corrective action is required, as noted in the 2000 IMF ROSC. According to a subsequent 2002 IMF FSSA on Gabon, the solvency margin does not reflect asset risks on the balance sheet, and might overestimate credit risks from reinsurance companies. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 23 on Capital adequacy and solvency.

ICP 24 Intermediaries

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According to the IMF's 2000 ROSC, ICP 11 on market conduct was only "partially compliant" due to the lack of enforcement of "tariff of automobile insurance rates." As noted in a subsequent 2002 IMF FSSA on Gabon, the CRCA lacks powers in the area of market conduct. Furthermore, the DNAs have not developed codes of conduct. The 2002 IMF report recommended requiring local DNAs to monitor commercial relations between companies and brokers, and develop market conduct codes. However, the IAIS revised the ICPs and the Methodology in 2003 and there is insufficient information publicly available as to Cameroon's compliance with the revised ICP 24 on Intermediaries.

ICP 25 Consumer protection

II

There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 26 Information, disclosure & transparency towards the market

II

There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 27 Fraud

II

There is insufficient publicly available information regarding Cameroon's compliance with this principle as revised by the IAIS in October 2003.

ICP 28 Anti-money laundering/ Combating the Financing of Terrorism

II

As noted in the 2006 IMF ROSC on anti-money laundering and combating the financing of terrorism (AML/CFT), the CIMA supervises member states from both the CEMAC and WAEMU, which are part of the same "franc zone". The IMF report recommended adopting AML/CFT regulations in line with the CEMAC and WAEMU obligations. The CIMA should also collaborate closely with member countries' national insurance authorities, in particular to "ensure the effective complementarity and consistency of provisions applicable to insurance companies with those for insurance intermediaries" (p. 11). According to the same report, a CEMAC regulation was adopted in 2003 that criminalizes money laundering and the financing of terrorism. This Regulation applies both to banks and insurance companies, exchange houses, stock brokerages and casinos, as stated in a 2004 U.S. Department of State International Narcotics Control Strategy Report. Nevertheless, there is insufficient publicly available information regarding Cameroon's compliance with this principle, as revised by the IAIS in October 2003.