KPMG Head of Insurance for East Africa James Norman has described Africa’s hugely unexploited insurance market as a sleeping giant.
According to him, there is a real buzz about the sector because of its plentiful or enormous opportunities.
“There’s a real buzz about the sector because opportunities are immense,” he says. “There’s a young population, a growing middle class most with smartphones and an increasingly large diaspora coming back”.
Speaking to Business Insider Sub Saharan Africa, he expressed that the African continent has a young generation of savvy consumers with disposable incomes and large infrastructure projects being built.
“The insurance market is closely linked to economic growth. When incomes rise you have more insurable assets.
Norman also described the sub-Saharan African insurance market as a “diverse picture”.
“Additionally,there is also a huge amount of innovation happening around the continent: InsureTechs and FinTechs are on the rise”.
He however urged insurance companies to be innovative in carving packages that are better suited for the African market instead of a replication of products and services from the advanced countries.
Norman believes there is definitely insurance gap in Africa since the continent can only boast of social insurance, informal insurance which even falls short of the trust of consumers.
“There is a general conception that says insurance companies fail when it comes to paying claims”.
The KPMG Head of Insurance for East Africa also called for collaboration between banks and insurance companies in the country.
According to him, the convergence of the two financial institutions will help the industry succeed and also make it easier to sign up people for insurance policies.
Although insurance regulations in Africa are really catching up with world’s best practices, stakeholders must be committed to increasing the awareness on insurance, he added,
Technology in insurance
James mentioned the need to incorporate technology into running the insurance industry in Africa.
He explains that, technology is a game changer for the insurance industry, therefore insurance companies must leverage on available technology to have a good run.
South Africa accounts for almost 80 percent of all premiums in sub-Saharan Africa and the country has an insurance penetration rate.
The total value of insurance premiums as a proportion of GDP of about 13 percent, well above the developed world average.
Of the rest, Kenya is among the most advanced, with a penetration rate of 3 percent.
Nigeria, in comparison, is about 0.3 percent, even though it is Africa’s largest economy.