Low insurance penetration in Africa still presents an opportunity for growth in the continent
A survey conducted by chief executive officers of Africa’s primary insurers has listed Nigeria’s premium growth rate as negative alongside Algeria and Kenya, according to the 4th Africa Insurance Barometer.
The growth rate is amid $67.7 billion premium posted by the continent’s underwriters in 2018.
According to the survey, in Africa’s largest insurance markets, total real premium growth was positive in Egypt (+9.8 per cent), Namibia (+7.8 per cent) and Morocco (+3.0 per cent), stagnant in South Africa (+0.1 per cent) and negative in Nigeria (-10.5 per cent), Algeria (-2.8 per cent) and Kenya (-2.0 per cent.)
The annual survey conducted among the CEOs of Africa’s primary insurers noted that the industry continues to benefit from its underlying growth story, the resilience that it demonstrated during the downturn and a strengthening regulatory framework.
The 4th Africa Insurance Barometer, which was launched in Johannesburg, South Africa, stated that the continent’s insurance markets had returned to a more stable environment following the deep and sudden economic downturn in 2015/16.
It noted that due to positive exchange rate developments, in particular, the strengthening of the South African rand against the US dollar, premiums grew by 12 per cent in US-dollar terms from $59.4 billion in 2016, reversing the trend of previous years when African growth rates were negative due to depreciation of African currencies.
On an inflation adjusted-basis, overall insurance premiums increased by just 0.5 per cent in 2017, which was ahead of the growth in advanced markets (-0.6 per cent), but below the 10.3 per cent volume growth for the world’s emerging markets.
While calling for insurance to be introduced in secondary schools across Africa for increased insurance education, she urged companies to adopt multi-channels to sell insurance products and services. Operators, according to her, must do all they can, to make insurance accesssible to all, especially, those in the informal sector.
Reacting to the report, Secretary General of AIO, Prisca Soares, said the mood among Africa’s insurance executives polled for this year’s Africa Insurance Barometer was slightly more cautious than last year.
“Following the deep recession of 2015/16, insurers are less bullish. The crisis exposed Africa’s continued vulnerability to external shocks. In addition, the prospects for the global economy and for global trade have reduced for the near-term future. However, with the availability of technology and an expanding middle class, awareness and the understanding for the benefits of insurance are improving among policymakers, regulators and consumers. This will generate additional impulses for the industry.” she said.
The outgoing President, AIO, Mrs. Aretha Duku-Gia, said low insurance penetration in Africa still presented an opportunity for growth, urging insurance operators to use the huge population of the continent to their advantage.
Highlighting the barrier to low Insurance Penetration, she said, micro economic, cultural and religious sentiments as well as low education are challenges that must be addressed for African insurance industry to compete favourably in the international market. While calling for insurance to be introduced in secondary schools across Africa for increased insurance education, she urged companies to adopt multi-channels to sell insurance products and services.