By Favour Nnabugwu in Zimbabwe
Insurance operators in Africa have been admonished to find lasting solutions to diverse challenges facing the sector so as to boost insurance penetration in the continent.
Mr Tendai Biti, Zimbabwean Minister of Finance, gave this admonition at the opening ceremony of the 38th African Insurance Organisation (AIO)’s general assembly and conference going on at Elephant Hills Hotel, Victoria Falls, Zimbabwe.
Biti said the insurance industry in Africa have had multiple problems which had contributed to the low level of insurance penetration across the continent. Those problems, he elucidated include low lvel of awareness, inability to meet the changing and yearning needs of insuring public compounded by low level awareness, among others
The Minister noted that with the exception of South Africa with a penetration rate of 16 per cent, insurance penetration rates of other countries are below the 7.5 global average including Zimbabwe with a 4 per cent insurance penetration. Biti further highlighted some of the major challenges facing the continental insurance market, adding that the biggest challenge working against insurance penetration in the continent is macro economic instability.
“High inflation and in some countries including Zimbabwe, hyper inflation made it unreasonable for individuals to patronise life insurance products,” he said, adding that the very low disposable income of many Africans also ensured that they remain unable to buy insurance products and services.
The Zimbabwean Finance Minister further noted that in the last ten years, African
countries faced various macro-economic problems and in the course of trying to resolve the crisis toyed with various economic policies to no avail. He also noted that sanity is fast returning to the continental economy saying “Africa dabbled into several policies but sanity is returning now.” Reflecting on the political instability, Biti noted that in the recent past, there were civil wars and political volatility in many African countries saying that these impacted negatively in the continental economies. He however, noted that this ugly trend is being reversed by the African governments with over general elections holding in 10 countries this year alone raising the hope of return to democracy across the continent.
Mr. Bai Ndogo Fao, AIO president in his welcome remarks said the continent has
remained under-insured as a reult of illiteracy level of a significant number of Africans. Fao however blamed the insurance operators for their failure to positive address the needs of potential insureds by marketing poorly designed products to the people while failing to design products that will meet the needs and aspirations of Africans.