African insurers are paying a hidden price for poor-quality data, with weak information systems driving up reinsurance costs, restricting underwriting capacity and ultimately making insurance more expensive and less accessible across the continent, according to new recommendations contained in the Africa Insurance Pulse 2026 report.
The recommendations, released as part of the report’s roadmap for strengthening Africa’s insurance industry, suggest that improving data quality could unlock greater reinsurance capacity, attract investment and support broader insurance penetration across the continent.
The report argues that inadequate data has become one of the biggest constraints to the development of Africa’s insurance markets. It notes that non-life insurance penetration, a measure of the extent to which insurance is used to transfer risk within an economy, remains well below global benchmarks across the continent. Even South Africa, the continent’s most advanced insurance market, records non-life insurance penetration of just 2.3 per cent of gross domestic product, compared with the global average of 4 per cent. In many lower-income African economies, weak data systems continue to limit insurers’ ability to assess risks accurately, expand insurance coverage and attract long-term investment.
Although the recommendations apply across Africa, they come at a time when Nigeria’s insurance industry is turning its attention from recapitalisation to strengthening operational efficiency, deepening market penetration and improving risk management, placing data quality at the centre of the sector’s next phase of growth.
According to the AIO, the current practice of relying on fragmented and inconsistent data forces reinsurers to adopt more conservative pricing models because they cannot accurately assess the risks being transferred to them.
“The current pattern, where uncertain data drives higher rates, tighter terms, more exclusions, higher attachment points and reduced proportional capacity, is a structural penalty that limits the potential to provide broader, better risk protection,” the organisation stated.
The report notes that these additional costs do not remain within the insurance industry. Instead, they are often transferred to policyholders through higher premiums, narrower coverage and fewer insurance products, making protection less affordable for households and businesses.
To reverse the trend, the AIO is urging reinsurers, brokers and investors to reward insurers that invest in stronger data systems with increased risk appetite, broader coverage support and more transparent pricing structures.
It said insurers that develop robust underwriting, exposure and claims databases should benefit from greater reinsurance capacity and improved pricing, creating stronger incentives for sustained investment in data governance and analytics.
The organisation also called on international reinsurers to deepen their presence across African markets rather than assessing risks remotely.
It recommended increased technical collaboration, knowledge exchange, local training programmes and the development of African catastrophe models to improve risk assessment and reduce information gaps that continue to constrain market growth.
Beyond reinsurance, the report urged insurance companies to treat data as a strategic business asset rather than a by-product of daily operations.
According to the recommendations, insurers should replace fragmented, department-specific information systems with integrated enterprise-wide data platforms supported by embedded analytics, while investing in actuarial science, data analytics and climate-risk expertise.
The report also encouraged insurers to complement traditional claims records with alternative sources of information such as satellite imagery, mobile phone data, agricultural indicators and other digital datasets that can improve risk modelling and support the development of products for underserved populations.
According to the AIO, integrating these alternative data sources will enable insurers to design more relevant products, improve pricing accuracy and extend insurance protection to customer segments that have historically been difficult to serve, including smallholder farmers and low-income communities.
The organisation said stronger data governance would not only improve operational efficiency but also enhance access to capital markets, lower reinsurance costs and support more accurate pricing of insurance risks.
For governments and regulators, the report called for the establishment of harmonised insurance data standards across African markets, including common definitions, reporting formats and minimum requirements for underwriting, exposure and claims information.
It also urged regulators to introduce incentives that elevate data quality to a board-level priority while imposing penalties for persistent inaccuracies, incomplete submissions and delays in regulatory reporting.
The report further recommended that supervisory authorities continuously update continental data standards to reflect emerging risks and technological developments while drawing on international best practices, including the Insurance Core Principles developed by the International Association of Insurance Supervisors.
According to the AIO, stronger public data infrastructure, digital identity systems, electronic policy frameworks and balanced regulation for artificial intelligence and parametric insurance products will also be essential for improving market efficiency and expanding financial inclusion.
The organisation identified regulatory fragmentation across Africa as one of the biggest obstacles to improving insurance data quality, noting that inconsistent reporting requirements and differing supervisory frameworks continue to hinder efforts to build a unified insurance information ecosystem.
It outlined four immediate priorities for transforming Africa’s insurance markets: stronger regulatory leadership to mandate standardisation, greater industry investment in shared data infrastructure, institutional oversight to manage common data systems and sustained funding to build and maintain them.
The AIO warned that unless governments, regulators and the insurance industry act collectively, African insurers will continue to incur avoidable costs arising from poor-quality data. Those costs, it said, will ultimately be passed on to consumers through higher premiums, reduced coverage and slower market growth, limiting the industry’s ability to provide broader financial protection and support economic development across the continent.
“Without decisive action, African insurers will continue to bear a structural penalty for information gaps that can be addressed,” the organisation added.
