Insurance in Africa: Is the Continent really taking charge?
Insurance facilitates investment by reducing the amount of capital that businesses and individuals need to keep at hand to protect themselves from uncertain events. Despite its importance for economic development, the majority of African countries lack access to insurance products. Access to insurance only starts to increase quickly in the upper middle income brackets, but with most Africans still just struggling to meet their basic food and other day-to-day needs, insurance is still a long way off. Apart from low income levels, other reasons for low insurance penetration in Africa are:
• Low awareness and understanding of insurance across various population segments;
• People do not trust financial service providers;
• Given the low income levels and how challenging the business environments are, there are not enough incentives for multinational companies to enter African markets and develop the sector;
• There is a lack of reliable information, making it very difficult to assess people’s risk;
• The legal and judicial systems are poor;
• There is a lack of human capital and expertise;
• Shallow financial markets make it difficult to raise enough money to capitalise insurance/re-insurance companies;
• Communities often make use of informal forms of insurance rather than using the services of formal insurers.
Albeit, this is gradually changing. As we show in this report, the growth in the volume of insurance premiums in Africa has been among the highest in the world over the past few years. An increasing number of foreign insurance companies are also entering Africa’s underserved insurance markets. It is especially noticeable that African companies are among the most active investors across the continent. In this report, we will explore which countries’ companies are the most active in other African countries.
According to Swiss Re, the total value of Africa’s insurance premiums was just shy of US$70bn in 2013, down 2% from the US$71.35bn in 2012. This means that Africa’s share in the global market was 1.5%. The poor performance of Africa on a global stage is particularly noticeable if South Africa is excluded. South Africa accounted for nearly 74% (US$51.6bn) of all African insurance premiums in 2013, with the other 53 countries contributing only US$18.3bn, which is only 0.4% of the global insurance market.
Please download the full version of our sector report, Insurance in Africa
About David Okwara
Africa, Africa brief, Africa challenges, Africa opportunities, African countries, African insurance, Angola, challenges, development, East Africa, economic growth, economy, financial services, Foreign Direct Investment, foreign investment, insurance, investment, KPMG, KPMG Africa, Nigeria, South Africa, sub-Saharan Africa