Africa’s current uptick as the second fastest growing insurance market ended 2020 with dampened penetration performance, it dropped from 2.78% to 2%. This was unveiled by concluded the President, African Insurance Organisation(AIO), Mr. Tope Smart pictured) at the insurance retreat for Africa organised by the government of Zanzibar held recently at Madinat el Bahr, Zanzibar.
Smart said while the global average penetration rate made strides up from 7.20% in 2019 to 7.40% in 2020, Africa dipped. His comment, “In 2019, while the global average penetration rate was 7.20% that of Africa was 2.78%. In year 2020 while the global average went up to 7.40%, that of Africa came down significantly to about 2%. This should be of great concern to us as a region.”
He attributed the low insurance penetration on the continent to; low income, low awareness level, failure to embrace digital technology, high level of financial exclusion, lack of infrastructural & distribution channels, lack of domestic skills and a shortage of data, and revolving brain drain.
Smart who is also the managing director, NEM Insurance Plc, implored regulators to keep pace with innovation, as timing and implementation of regulatory changes should galvanise and aid development; he did not treat operators with kid gloves either noting that lack of consumer trust as well as presence of weak companies erode trust, pricing and other market related issues. Also deflecting penetration efforts in the continent he stated are, cultural related issues, fragmentation and over competition.
He therefore, charged relevant stakeholders to address these barriers and put the continent on the path way to resurgence comparable to other regions in the world.
“If the issues highlighted are critically addressed, the result will lead to a significant growth of the insurance sector. It is also important to mention that the underlying economic growth forms the most important catalyst for growth and good enough, the outlook for GDP growth is strong across markets,” he stated.
The coming up of African Continental Free Trade Area (AFCFTA), would be a game changer for the Insurance sector, because insurance plays a major role in the economic development of the continent, and he expected increase in intra-African trade through AFCFTA will lead to higher insurance penetration across the region.
To him, “the potential to increase life insurance growth is note worthy. In many markets apart from South Africa, non-life represents at least 65% of total premium income with even some up to 85% (Tanzania & Uganda). Given this scenario, the potential opportunity to expand life insurance is very great.”
The event which was organised by the government of Zanzibar, had in attendance, its president, Commissioners of Insurance from Tanzania, Uganda and Zimbabwe and over 200 attendees.