Only 10 African countries contributed 92 percent of the total premiums that insurance firms enjoyed across the continent in 2014, with six of them surpassing the $1 billion threshold in non-life premiums.
The nations are South Africa, Morocco, Egypt, Nigeria, Kenya, Algeria, Angola, Namibia, Tunisia and Mauritius.
The insurance market in Africa was worth an estimated $69 billion in 2014, which was a fall from $72 billion in 2013, THIS DAY reported.
Nigeria, the most populous nation on the continent with about 173.6 million people has the greatest growth potential yet it is still considered one of the toughest markets for insurance companies to penetrate, according to a report by African Insurance Organization (AIO).
The report was released in May during AIO’s 43rd Conference and General Assembly conference held in Marrakech, Morocco.
The challenges in penetrating the Africa’s largest economy draw from the terrorism, fuel and currency crisis that have hit its economy since 2014.
There is also endemic corruption and power shortages.
As a result of the challenges, non-life insurances shrunk by -2.2 percent while life insurance grew in line with the Gross Domestic Product (GDP), alongside Tunisia, Algeria and Botswana.
However, the future prospects for the insurance market in the West African nation economy is bright, according to market analysts.
An increase in the number of people within the upper-middle class means that there are more people who can afford insurance.
The government has put in place systems and regulatory measures to increase the capacity of local insurers to handle higher risks, aimed at boosting investor confidence.
There have also been initiatives to boost mobile banking through signing of agreements between banks and telecommunication companies in order to tap into the population.
South Africa, the continent’s second biggest economy dominated in both life and non-premiums, accounting for 87 percent and 40 percent respectively, according to AIO’s inaugural report, African Insurance Barometer.
Economic boom in the ten countries led to insurance growth, with non-life premiums leading in the insurance companies’ profits.
However, insurance penetration in other African countries remained poor, with some nations experiencing a less than one percent growth in 2014, which was below the emerging market average of 2.7 percent, COVER reported.
In most of nations with a low penetration, the insurance sector’s contribution to GDP was significantly lower than the global average of 6.2 percent.
A shortage of skilled and experienced insurance professionals, low income earning and lack of an understanding on insurance benefits by a majority of the people are key factors behind the low penetration.
