How insurance is transforming a rapidly growing Sub-Saharan Africa: EY (Infographic, Video & Report)





Africa is Rising

Table of Contents

  • Growth
  • What’s driving insurance growth in Africa?
  • Survey findings relative to growth
  • Seizing the growth opportunities
  • Challenges
  • Seeking talent, education and trust
  • Survey findings relative to challenges
  • Risks
  • A wide range of risks requires robust mitigation strategies
  • Survey findings relative to risks
  • Innovation
  • Innovation: crucual for future growth
  • Survey findings relative to innovation
  • Innovation is taking hold
  • A matrix of risk and opportunity
  • Methodology behind the matrix
  • Country insights
  • Kenya
  • Tanzania
  • Uganda
  • Zambia
  • Malawi
  • Nigeria
  • Ghana

Read the full report below.

Executive Summary

Sub-Saharan Africa is a diverse region that presents risks, challenges and opportunities for the insurance industry. No “one-size-fits-all” approach is likely to succeed across individual markets and countries. This report shares insight into seven countries, each with different growth prospects and potential for investment. Our analysis shows that Zambia ranks first in opportunity, while Kenya is the most advanced of the insurance markets studied.

Our research identified four key themes, which we analyze in the report.

Growth

Significant population increases, rapidly rising incomes and the relatively low penetration of insurance products suggest huge potential for both life and non-life products. Underlying economic growth will be the most important catalyst for increasing revenue in four of the seven markets we surveyed. New technology is also fueling growth as a new generation of African consumers grows up in a digital age.

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Challenges

While new technologies can revolutionize customer interactions, finding the right technical talent is not always easy. Moreover, agents and brokers will remain critical to educating populations that have never purchased insurance. Volatility of returns and underwriting capacity were cited as dominant challenges across all countries.

Risks

In some markets, an abundance of under-capitalized companies leads to excessive competition around price, rather than service, a situation that could erode consumer trust. Heightened regulatory scrutiny and an increased level of M&A can help alleviate this problem and address the issue of price undercutting. Finding adequate reinsurance, combatting fraud and anticipating macroeconomic instability are also part of the business landscape.

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Innovation

Innovation spawned in Africa, including mobile and cashless payments, could soon disrupt conventional sales channels in the developed world, while creating unprecedented new opportunities to sell coverage across Africa. Mobile phones now drive sales of life, crop and health insurance in a number of key markets, and are expanding into rural areas. As innovation takes hold, there is a need for greater financial literacy and trust between consumers and insurance companies.

Among other conclusions, we learned that:

  • Markets in Zambia, Ghana and Kenya will offer the most attractive mix of rewards and risk over the next three years, based on an analysis of such indicators as market size, demographic change and projected growth, as well as macroeconomic and political risk.
  • New technologies — mobile, online and collaborative tools — will play a critical role in expanding the market for insurance. Yet these will not easily upend traditional sales approaches.
  • Agents and brokers will remain crucial to selling insurance products that are neither tangible nor broadly used by Africa’s rapidly expanding middle class.
  • Despite the great excitement surrounding micro-insurance, it generates only marginal revenues today. Survey respondents estimate that general insurance and life coverage will continue to account fully for two-thirds of premium revenues in three years, as they do now.
  • Consolidation in the marketplace is necessary to build confidence among consumers. The presence of financially weak carriers erodes trust, especially if they are unable to pay valid claims. Regulators may acknowledge the need for further consolidation, but may not always be willing to let foreign insurers control majority shares.

Waves of change revisited – Insurance opportunities in Sub-Saharan Africa: EY

View more analytics from African Business Central.

Source: EY – Insurance opportunities in Sub-Saharan Africa – EY – Global

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