From right: President African Insurance Organisation and Group Managing Director NEM Insurance, Tope Smart and his wife Mrs. Tonia Smart at the event.


AIO Executive Committee members,
Distinguished panellists,
Ladies and gentlemen,

I am greatly honoured by this opportunity given to my humble self, to deliver this keynote on the occasion of the 50th anniversary celebration of Africa’s insurance torchbearer, the African Insurance Organisation.
The theme of this discussion for which I am delivering a keynote is THE AIO AT 50: A CALL FOR AFRICAN INSURANCE RENAISSANCE.
Before we discuss the substance of the subject, I will like us to be on the same wavelength with the major concepts imbedded in this theme.
Permit me limit my concept definition to one keyword, RENAISSANCE, for time constraints, and I also wish to work with the assumption that the other words are easily understood.
Simply put, renaissance can mean re-birth or a revival of or renewed interest in something. There are hundreds of concepts around this word, Renaissance.
For example, renaissance has been defined as the activity, spirit, or time of the great revival of art, literature, and learning in Europe beginning in the 14th century and extending to the 17th century, marking the transition from the medieval to the modern world.

I won’t want to enter all those scientific concepts and controversies surrounding the word so let’s limit ourselves at Renaissance to mean rebirth, revival, renewed interest or transition.
When we talk about rebirth, it means something was born earlier and has been existing, and due to some factors, went dormant. Revival equally signifies that something has been living but at some point, witnessed a slowdown in steam.

Let me begin by attempting a look at the past 50 years of the African insurance industry within the context of the birth of the AIO, before making some projections into the future.

1.1 Insurance penetration in Africa: Awareness, reputation building, barriers, and tools
The African insurance industry remains one of the least penetrated in the world, with significant scope for growth. In this respect, Africa’s average insurance penetration remains comparatively low at around 2% in 2020, measuring well below the global average of around 7%. The insurance penetration rate in Africa is mainly a function of average national incomes and the extent to which compulsory insurance regulation is enforced in various sectors. These primary drivers feed into the level of insurance awareness.
The continent’s low average insurance penetration over the past 50 years rate is largely attributed to:
• lack of awareness on available insurance products,
• low-income levels among the key consuming public,
• perceived low rate of returns for life policies,
• cumbersome claim settlement procedures,
• lack of trust of insurance players,
• inappropriate pricing and risk profiling,
• poor product-market fit,
• inadequate distribution channels and
• expensive premiums.
1.2 Insurance Regulation and Supervision in Africa: The past 50 years
Insurance supervisors in Africa have historically focussed mostly on prudential soundness (Beyers, Chiew, Gray & Hougaard, 2020). As such, the reporting and measurement frameworks for prudential oversight are well established. However, most regulatory mandates have been evolving and progressing, with a broadening focus on conduct of business, treating customers fairly, inclusive insurance and proactive development of the insurance industry (Beyers, Chiew, Gray & Hougaard, 2020). There is now also a greater recognition of the link between insurance and broader policy challenges- inclusive economic development, climate risk and digitalisation. This broader focus calls for measurement of a broader suite of indicators and places additional data gathering, and analysis requirements on insurance regulatory authorities (Beyers, Chiew, Gray & Hougaard, 2020). As such, several governments have been coming on board to assist in the development of the insurance industry.

Some African insurance supervisors have gradually been moving from compliance-based to risk-based supervision to ensure the financial sustainability of the industry in line with global trends. Many insurance regulators are revising their Insurance Acts to incorporate best practices, such as risk-based supervision, treating your customer fairly (“TCF”) procedures, and many other prudential rules to increase the protection of policyholders. In this regard, there are a few regulatory authorities that have implemented a Solvency II framework, albeit it with varying levels of simplifications. South Africa, Kenya, Rwanda, Uganda, Mauritius, and Morocco adopted Solvency II frameworks, leading the pack across the continent. Namibia is on course towards adopting a risk-based solvency framework, with the draft model having been presented to the market for comments. Zimbabwe is undertaking a parallel run of the Zimbabwe Integrated Capital and Risk Programme (“ZiCARP”) (Insurance and Pension Commission Zimbabwe, 2021). Other jurisdictions, such as Malawi, Zambia, Tanzania are in the early stages of developing a risk-based solvency model, although the current frameworks have comprehensive modules in measuring admissible assets against liabilities that consider a wide, but not so comprehensive, range of risks.

On the other hand, Western Africa, including the CIMA zone, Nigeria and Ghana, opted for higher absolute minimum capital requirements commencing from 2020, in addition to existing simple risk-based models that compare net admissible assets against liabilities, particularly in the CIMA zone. In most instances, the minimum capital requirements increased between USD8m and USD10m for primary insurers, while for reinsurers the capital requirements increased significantly by between USD15m and USD25m (AIG, 2018). The concept of the CIMA zone regulatory authority is viewed as co-operative, unifying and harmonious, while simplifying regulation and supervision.
1.3 Insurance rating in Africa: Strengths and Weaknesses
Financial strength ratings provide an opinion of an entity’s ability to meet its financial commitments to its policyholders. Financial strength ratings are provided by credit rating agencies such as Standard & Poor’s (“S&P”), Fitch, Moody’s and AM. Best.

There has been a growing number of insurance companies obtaining credit ratings over the last decade, given the widening acceptance and importance of ratings across the continent. In this respect, the major importance of insurance ratings include:

• Assisting insurance buyers and brokers with easy selection based on independent opinions when buying insurance covers.
• Helping management and directors in assessing the performance of their companies over time and against peers in the market.
• Instilling discipline and embedding best practice in the management of insurance companies.
• Less sophisticated users of ratings derive some level of confidence from the simplistic measures.
• Assisting in the development of capital markets.

On the other hand, the main weaknesses of insurance ratings are:

• On an internal scale basis, there is little credit differentiation, given the low sovereign ratings across the continent.
• Many African countries are in default and international ratings will not help the companies in those jurisdictions, as ratings are derived from the country risk of its jurisdiction.

• International companies are likely to get higher ratings and thus sizeable mandates than local companies, frustrating efforts of localizing profits and development.
1.4 Insurance Training and Capacity Building: Sufficient or lacking?
According to the United Nations (2022), capacity-building is defined as the process of developing and strengthening the skills, instincts, abilities, processes, and resources that organizations and communities need to survive, adapt, and thrive in a fast-changing world. An essential ingredient in capacity-building is transformation that is generated and sustained over time from within; transformation of this kind goes beyond performing tasks to changing mindsets and attitudes (United Nations, 2022). Due to the technical nature of insurance and the importance of experience, skill and product knowledge, as well as the potential role of the sector in economic development, investing in capacity building has become very critical.

Most products offered in Africa are still largely influenced by European standards. Furthermore, the solvency regimes are still derived from European models, given the lack of mortality tables that are African derived, excluding Kenya, South Africa, Uganda and more recently Zimbabwe.

In light of the rapid changes in technology, shifting labour market demographics, higher customer expectations, growing competitive dynamics, turbulent in operating environments, are the programmes and training requirements evolving at a pace to address these issues?

1.5 Transfer of knowledge on Insurance from generation to generation (Leadership)
Historically, there was a huge gap in knowledge transfer intergenerationally. However, as organizations are progressing, there is rising awareness of the need to transfer knowledge from generation to generation. In this respect, some organizations are implementing mentoring programmes aimed at passing knowledge and training future generations for success.
1.6 Political and economic stability in Africa: Effects and role of the insurance industry
Political stability is very important, especially for developing countries. According to Dalyop (2019), the relationship between political instability and economic growth flows in either direction, with high political instability resulting in low economic growth, and low economic growth resulting in political instability. The political landscape is a factor that is used to determine the institutional landscape of a jurisdiction. In this regard, the institutional assessment is based on how political risk, regulatory quality, government effectiveness, governance factors and the business environment, which render an economy more or less likely to absorb shocks. Most countries in Africa have weak institutional scores, given high political risks, governance challenges, comparatively high levels of corruption and somewhat low accountability.

Over the last decade, some African countries have experience political and economic stability, which resulted in increased productivity and investor confidence. This subsequently cascaded into the development of the insurance industry. Meanwhile, some other countries were characterized by comparatively high political instability, resulting in volatile economic development.
1.7 Growth of the African insurance industry: Premium flight and Utmost Good Faith.

Growth opportunities in the African continent remain high, largely driven by a young and growing population with increasing utilization of technology. Despite the additional pressures of unrelenting regulatory and insurance accounting changes, and the huge costs associated with the changes, there are also some positive developments and opportunities for growth. The younger generation is looking for new ways to connect and protect, bringing affordability and access to the continent. These market conditions and dynamics are likely to continue to give rise to Insurtechs who, through technological innovation, are able to tackle consumer awareness and resistance and address inefficiencies within the financial system for product development, distribution, and settlement.

Having looked at what the African insurance industry looked like yesterday, permit me share with you, what we think the industry should look like in the next 50 years. The areas we need to lay emphasis on for a better, more vibrant insurance industry. The list is not exhaustive and I’m sure the imminent panelists here will enlighten us more.

The insurance sector can play a crucial role in financial and economic development. By reducing uncertainty and limiting the adverse effects of large losses, the sector can encourage new investments, innovation, and competition.

2.1 Technology, Innovation and Data
The insurance industry in Africa is undergoing a period of significant change and disruption. It is now evident that technology is playing a major role in this, with new companies and business models emerging that are challenging the existing ones. The technological advancements in information management tools and mobility have paved the way for a new era in the African insurance industry.

Consumer behavior is ever changing, and this constantly puts pressure on insurers to adapt and innovate if they are to stay relevant.
Nonetheless, the future looks bright for the African insurance industry, and it will be fascinating to see how it develops over the coming years. One way, amongst many others, in which technology is shaking up the status-quo is through the use of Blockchain. This distributed ledger technology has the potential to provide a more robust and efficient infrastructure for the industry, improving transparency and reducing costs.

2.2 Education and Training
There is an existing gap between academia and the professional world which needs to be bridged. There are many questions regarding education and training in the African insurance industry, which need to be addressed.

Given the changing needs of learners towards more flexible training regimes, coupled with the need to improve the quality of insurance education in Africa and make it Africa relevant, there is the need for changes to insurance training and capacity building systems in Africa. This underscores the need for collaboration among the various insurance training institutions across Africa towards standardization of insurance training in the continent.

The African Insurance Organisation is therefore called upon to play its role as the center of excellence for insurance in Africa. As key stakeholders focus on relevant training and capacity building, there will be an increase in productivity, enhanced core competencies, better skills and job performance, increased employee motivation, ownership and confidence, and greater innovation and development.

2.3 The role of AIO in Insurance integration in AfCFTA
One of the main objectives of the AfCFTA is to create one African market, by eliminating non-tariff trade barriers.
Insurance is an enabler of trade; Insurers are the risk managers and financial risks shock absorbers. Therefore, to take advantage of the AfCFTA the following levels of integration will be crucial in the African insurance industry:
– Harmonization of insurance laws and regulations
– Harmonization of tax regimes
– Harmonization of insurance education and training standards
– Claims management agreements
The removal of trade barriers under the AfCFTA, will further enhance the need for standardization and harmonization in the African Insurance Industry.

With the expectation of fully implementing the African Continent Free Trade Agreement (“AfCFTA”), there is likely to be a rise in the requirement for insurance companies to have independent assessments of their credit profiles to facilitate free flow of trade.

2.4 Integration of the Younger Generation of Insurance Professionals
There must be an early integration of the younger generation of insurance professionals as a way of managing a seamless transition and bridging the succession gap which is presently inherent in the African Insurance Industry. Transferring knowledge from generation to generation provides support, helps develop careers and assists in achieving tangible results. Note is also taken of the benefits that the mentors receive from transferring knowledge such a learning experience, improving leadership skills, as well as leaving a legacy.
Given the importance of intergenerational knowledge transfer, leaders must be committed to investing in the younger generations.
According to Insurance Business America, one of the biggest changes the younger employees are bringing to the insurance industry is a focus on customer experience.


In conclusion, there is a vital responsibility on the shoulders of the AIO to lead the action towards a synergized African insurance industry, working towards standardization and harmonization within the African insurance industry. We have the lessons of the past to guide us and there is no better time to start than NOW, right here, as we discuss the renaissance of the African insurance industry. The Covid-19 pandemic caught many of us unprepared with regards to digitalization and innovation; we need to be more proactive and move away from our old ways which are no longer relevant and move towards insurance which people can trust, insurance which is tailored towards the needs of customers, insurance that is affordable, insurance that is accessible and relevant to the problems of today. There have been good days and there have been challenges but the industry has proven to be resilient and if we are here today, it is because we believe that the future will be brighter.

I now leave the responsibility to the Chairman and panelists to give us more insights on this topic THE AIO AT 50: A CALL FOR AFRICAN INSURANCE RENAISSANCE.

Thank you all for your kind and keen attention.

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