By Rosemary Onuoha
AFRICAN insurers are banking on the wave of economic recovery across the continent for improved fortunes of the sector which was severely impacted by the economic recession that occurred between 2015 and 2016.
This is one of the highlights of the third edition of the African Insurance Barometer launched during the just concluded 45th Conference and General Assembly of the organisation in Accra, Ghana.
Speaking at the launching, Secretary General of Africa Insurance Organisation, AIO, Ms, Prisca Soares, said that the continent’s insurers are slightly more enthusiastic about the current state and outlook for their industry than in the preceding two editions.
She stated: “In a survey conducted on the state of the regional markets after the recession, the insurance executives polled for the survey expect that the gradual recovery of the continent’s economy from its deep recession in 2015 and 2016 will positively impact on insurers’ rates and earnings and will ease pressure from excess capacity and fierce competition.
“This year’s Africa Insurance Barometer demonstrates that confidence is returning to Africa’s insurance markets.
“According to the AIO members polled for this survey, policy makers and regulators pay greater attention to our sector while consumers have started to realise the benefits insurance offers in protecting their assets. Our industry currently accounts for insurance premiums of $60.7 billion, which in dollar terms represents a decline over the previous year. However, in local currency, premium volume has not declined since 2011. In fact, with the advent of new technologies and the ambition of our industry to create and deliver tailored products to clients continues to grow, our relevance as a key sector for the prosperity and progress of Africa’s economies has greatly improved.”
She noted that the underlying economic and societal fundamentals of Africa’s insurance markets remained largely unchanged from last year’s survey.
She further observed that abundant natural resources, the young and growing societies, an expanding middle class and the advent of new technologies have driven insurance demands in the continent adding that the recent economic recovery, though still fragile in some countries, has added further momentum to the continent’s insurance outlook.
But Soares also observed a downside threat and stated: “As elsewhere, however, insurance markets suffer from excess capacity and cut-throat competition. As rates are low, regulators aim to protect domestic insurers from foreign competition with higher barriers of entry. The continent’s low insurance penetration is one of the market’s largest opportunities. With the economic rebound, insurers increased their efforts to broaden their product offering and widen distribution.”
She said improved technology provides new avenues for innovation, both in commercial and personal lines, and helps to bridge geographical distances, increase scale and thus improves efficiency.