By Favour Nnabugwu
STRONG indications have emerged that the growth of the Africa’s Reinsurance Market may hit record high in 2018.
The latest report from African Reinsurance pulse launched at the 22nd African Reinsurance Forum in Port Louis, Mauritius last week, indicated that the market is expected to benefit from strong underlying growth driven by an expansion of its primary markets with insurance premiums of $68 billion.
For 2018, the senior reinsurance and brokerage executives interviewed expect results to improve markedly as the underlying market fundamentals remain largely unscathed from the current decline.
In 2016, Africa’s GDP growth dropped to 1.8%, below the global average of 2.5%. Insurance premiums declined by 15.3% to $61 billion.
However, the contraction is mainly due to the depreciation of some key African currencies against the US Dollar.
The Group Managing Director of Africa Reinsurance Corporation, Mr. Corneille Karekedzi, said more than 90 percent of Africa’s insurance companies have only been created in the past 40 years.
He stated: “As a result, our industry still has to build the awareness for the benefit of protecting and enabling economic progress. The Africa Reinsurance pulse provides succinct data and information on our continent’s reinsurance markets and contributes to these goals as it demonstrates our industry’s potential and also its challenges.”
The report said the market’s growth will be based on abundance of natural resources, the need for infrastructural investment, emergence of an expanding middle class and a young and growing population.
Although there is no uniform trend across the reinsurance sector in Africa, rising protectionism and excess capacity are major concerns. Underwriting quality, risk management and expertise are seen to be improving.
An expanding middle class, a deeper understanding for insurance products and the emergence of new technologies will benefit insurance markets and help increase.