Africa insurance penetration seats at the lowest rung of the ladder of insurance penetration, its standing on the first step on the ladder has become a constant first sight for anyone finding where nations and continents stand in the insurance place in the economy.
The position of Africa is not a blanket description of the continent no thanks to the penetration garnered by South Africa, Mauritius but the general ranking despite exception puts the continent below two per cent when global average is about seven per cent.
This unenviable burden of occupying same a position that distils poor insurance penetration has turned out a worthy cause for Tope Smart, Board Chairman NEM Insurance Plc and a former President, African Insurance Organisation to embrace and find adherents for change across the continent to push insurance penetration in Africa deep into the disposable income of potential buyers in all countries in the continent.
The penetration figures have been flat not for lack of efforts in various local markets, but the feedback that follows market and individual companies efforts show no dice reaction from large chunk of potential buyers. Personal lines is the hub for a potential burst up in mass appeal for insurance purchase but the poor economy sends approaches back with little sales clicks. However, there is the sustained talk that this is the time to purchase insurance and sustain policy renewals because replacement is much difficult to put up with when the economy is tough.
This state of insurance in the continent does not deflate Smart but nudges him to do more to the point of building a continental penetration brigade to change the order. That was why during his term as AIO President he said with contentment, “The very thrust of my message was insurance penetration in Africa.”
At that time, he said he travelled across Africa and visited so many presidents and Heads of States and Governments. He asserted that the only message he was preaching was gospel according to insurance.
However, the visits also threw up where some of the hurdles were; right in the majestic domains of the First Citizens of the various countries. The hurdles did not spare the high and mighty places and coming across that consistently show that getting over the national hurdle in various markets needed a formidable consistent action that would be actionable from the office of the Head of State. He relayed the experience that captured the the low insurance performance, “I met so many presidents and unfortunately many of them confirmed to me that they don’t understand how insurance works.”
The challenge then Smart cleared was, if the government which is supposed to be the main driver of insurance in the various countries of Africa ‘does not understand what its driving, then we have a lot to do.’
He said in Nigeria where pension has been separated from insurance the former is expectedly doing very well as the legislation establishing its operation is laced with mandatory contribution and responsibilities of parties involved. With that settled, he noted that insurance is behind pension position in GDP though, it reached the trillion mark in gross written premium for the first time in 2023 since it was thrown as a challenge by the market regulator 14 years ago. This performance he acknowledged, show that the industry was making good progress, “but we needed to do much more and all stakeholders need to be united to realise the objectives of increasing and sustaining insurance penetration.”
He remarked that his passion for insurance penetration discourse resonates each time the issue is presented any where in the continent. Incidentally he said the issue is still high in the agenda of AIO and come early June when another continent confab holds it will generate more input to make the desired change.
