The President, African Insurance Organisation (AIO), Mrs. Lamia Ben Mahmoud has lamented that Africa’s share of global insurance premium remains low at 1.4 per cent.
She added that penetration remained low with a premium/gross domestic product (GDP) ratio not exceeding one per cent in some countries. This is below the average rate of 2.7 per cent recorded in 2014 for the entire continent, she added.
Delivering a speech at the opening ceremony of the 43rd Conference and General Assembly holding in Marrakech, Morocco, yesterday, she said Africa’s share of the global insurance market is 1.1 per cent for Non-Life insurance business and 1.8 per cent for Life Business, adding that this is a demonstration of the enormous growth potential within the African insurance industry, an indicator that the market is still largely untapped.
In order to insure Africa’s future, she said insurers all over the continent must devise strategies aimed at facing the numerous challenges today.
According to her, within the past decade, the continent has been hit by some major challenges which have to a large extent hampered economic growth and affected the insurance sector tremendously.
She said: “I am referring to the recent drop in fuel prices, in fact, the price per barrel in January 2016 stood at approximately a quarter of its market value two years ago, and at the lowest point since 2003.” On the list of challenges, she identified cyber criminality, political instability, and insecurity with new waves of terrorist attacks, climate change and food security challenges.
“We still suffer from a shortage of skilled and experienced insurance professionals. As a result, large and complex risks are not retained within Africa but are ceded to foreign insurance markets because specialist risk management capabilities and high quality security are not sufficiently available. This leads to premium flight which threatens the viability of the domestic insurance industry. Moreover, there is still wide spread ignorance on the benefits of insurance. Added to this list is an acute insufficiency of product differentiation.
“We emphasise in this area on the need to strengthen the diversification of training in scientific and technical issues by leveraging new tools and instruments imposed by the development of technology to ensure greater communication of their knowledge and know-how.
“The challenges are many and daunting; especially in a context where the one size solution is outdated as customers now expect personalised insurance solutions.”
She said it is true that some of the solutions to these problems require a multidimensional approach with the input of other key actors required, adding that extending insurance cover to the unserved segment of the population will increase penetration in Africa.