Four African countries, Nigeria, Ghana, Tanzania, Zambia and Cote d’Ivoire will grow Africa’s insurance market by 4.3 per cent in 2016 and 5.1 per cent in 2017.
According to the International Monetary Fund (IMF) forecast, the fast growth in insurance patronage in these countries was due to the expanded market had reduced South Africa’s market share.
It said: “Insurance companies have historically focused their energies on South Africa, one of Africa’s most mature financial markets. Life insurance premiums in South Africa accounted for almost 90 per cent of the total life premiums across Africa in 2013.
“The rise in incomes and affluence feed insurance purchases as consumers spend more on discretionary items such as cars and second homes. A bump in spending on basics, including health care and mobile phones, has also created new streams of insurance premium revenues for companies.”
The fund noted that insurance premiums paid per capita in sub-Sahara lagged behind emerging Asian economies including India and Vietnam, with the premiums at less than three per cent of Gross Domestic Product (GDP).
It stressed that non-life insurance premium as a percentage of GDP hover at less than one per cent in some of Africa’s major economies, including Ghana, Tanzania, Zambia and Nigeria.
“Statistics suggest fertile ground for a regional boom in the insurance industry. Rising populations will breed further consumer demand, most notably in Ghana, Nigeria and Zambia, albeit only if the services offered can grow to meet the market,” he said.
The IMF report noted that African insurers had traditionally targeted the upper-income population because of disposal income and financial literacy.
The report added: “But the new consumer base is requiring changes to the system. For example, distribution through brokers and brick-and-mortar banks are inefficient pathways to reaching the lower-income population.
“Insurers are building online and mobile underwriting platforms for policy quotations and renewals as well as purchase and payment. Health insurance is offered through text message in order to expand access.”
The fund explained that Nigeria and Kenya were the leaders in this space, with m-Pesa mobile payment platform handling outpatient benefits and compensation for lost income.
According to the report, agriculture insurance was not creative but it noted that insurers had found ways to minimise risks and reassure farmers sceptical of the actual payoff of having insurance.
These, it noted include, include teaching farmers how to use weather data collected at remote monitoring stations, crossing the data with the usage of inputs (seeds, fertilizers, chemicals) and managing insurance payments based off those inputs.
A call for data warehousing and better analytics is breeding unplanned dates between telecom executives, insurance executives, and IT entrepreneurs.
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