Africa Insurance Barometer | 2018
| date: May 16th, 2018
African Insurance executives see technology as a key enabler in providing new avenues for innovation as well as helping bridge geographical distances, increase scale and thus improving efficiency.
This is according to the Africa Insurance Barometer 2018 market survey report released recently at the 45th AIO Conference and Annual General Assembly of the African Insurance Organisation (AIO) held in Accra, Ghana from the 6th to 9th May 2018.
The report which reveals findings from in-depth interviews conducted with various (re)insurance industry executives, points to technological advancements as creating business opportunities not only in commercial but also in personal lines. Insurers are now able to gain better access to customers through mobile phones and online information and broaden their distribution to reach Africa’s large rural population previous unreachable.
According to the report, Africa’s insurance markets suffer from excess capacity and cut-throat competition. This fierce competition is taking its toll on insurance growth and leading to protectionism as regulators attempt to shelter domestic insurers from foreign players with higher barriers of entry.
Protectionism might however not be the best move, as it weakens the market’s ability to diversify risks and retain access to international expertise. There is therefore a recommendation for insurers to pursue alternative solutions that will alleviate the risk of the African markets isolating themselves.
The report highlights how digital technologies have enabled an intra-African expansion of insurers into neighboring or adjacent territories as insurers gain better understanding of their target groups and their actual size.
Micro-insurance is also gaining momentum on the continent facilitated by new technologies which are enabling parametric triggers, lower cost of collecting and analyzing weather data and improved means of claims management. This in turn is helping enhance the efficiency of agricultural insurance and building awareness for the benefits of insurance protection among policy makers.
Overall, there is strong optimism among the executives interviewed for the Africa Insurance Barometer 2018 survey towards the growth of the African Insurance industry. Stakeholders’ seem to be banking on the continent’s strong underlying fundamentals such as an abundance of natural resources, a young and growing population and the expanding middle class to achieve momentum. Additionally, the continent’s low insurance population remains its largest opportunity as insurers increase their efforts to broaden their product offering.
The survey report provides a comprehensive picture on the current trends and developments of the African insurance industry. According to the AIO’s secretary General, Prisca Soares, the Africa Insurance Barometer is one of AIO’s many efforts to help strengthen the insurance markets in Africa by providing information and transparency.