Experts optimistic African insurers can top global list, if…

By Zainab Iwayemi

• Regulators rise to the tasks ahead
• Shift from protectionist to collaborative approach

Over the years, global insurance rankings have seen countries across Europe, Asia and America emerge at the forefront.  A recent ranking by AM Best shows that in 2019, insurance companies based in the United States, China, Germany and France topped the list of global insurance providers in terms of non-banking assets and net premiums written. This has raised concerns among stakeholders many of whom have raised questions as to when Africa insurers would get on the list, much more top the global rankings.

Experts have, however, expressed optimism in the African insurance industry, noting that the continent has what it takes to compete globally. Importantly, insurers across Africa, over time, are seen to direct efforts toward restructuring in order to meet up with the pace at which the world now finds itself.

“It will be the turn of Africa sooner than we can appreciate. Global insurance brands have been taking and strengthening their positions in the largest markets in Africa lately, so the results of their strategic work will become evident shortly,” Ekerete Ola Gam-Ikon, a consultant in management, strategy and insurance, pointed out.

Across the continent, insurance industries have shown strength and resilience despite the heat caused by Covid-19, coupled with unfavourable atmosphere chaired by poverty, illiteracy, amongst other challenges. Expert noted that though the industry has performed well over time, there is still more to be done to enhance value if we must take the lead.

Adedamola Oloko, a proponent of insurtech in Africa said, “Insurance is a business and, more so, a global business. I think that there are a number of insurers on the continent doing great things, for example, in South Africa whose market is one of the most developed in the world.  However, considering factors like the lower purchasing power, lower literacy level, lack of some necessary infrastructure, we are doing just okay but definitely can do a lot more to capture value even in our market.”

Going further, Oloko outlined how the industry can level with others across the globe. He stated that as much as the regulators have roles to play in redefining the industry, the governments need to create a friendly environment for the sector to thrive.

“First, we sell ourselves short many times when we discuss these things. In order to measure progress, we need to spell out parameters peculiar to our market, right. My engagements with insurance professionals from around the world inform my thoughts.  In order to have an industry that caters to the needs of the African customer, the regulators in each country need to up their game. The adoption of technology and opening up the industry to insurtech, aggregators, telcos, and other players will help the industry grow. Secondly, governments need to realize what insurance can do for the economy and bring the industry into economic planning and management,” he said.

On a similar note, Gam-Ikon pointed out effective regulation and the need to have an all-round focus on the sector as steps to tackle the challenges in the industry.  “Effective regulation that creates responsible and responsive operating environment, bold and innovative investors and well informed community of policyholders are needed. Importantly, we need the supply side to work together to satisfy the demand side of the insurance sector. So far, there seems to be deliberate work to satisfy the interests of individual companies while the challenges of the sector with regards to issues like low penetration, poor use of data and technology are not given appropriate collective actions. Industry players need to work together as a first step.”

Holistically, everyone has a part to play in the transitioning of Africa insurance to meet up with the rest of the world. Individual and business owners need to jettison the belief that the scheme is a charity; insurance needs to be perceived as an investment in peace of mind. Similarly, organisations who are yet to key into insurance stand the risk of great loss – many organisations have met their demise due to improper risk management.

On the part of regulators and government, more is expected to be done. There is a need to create an enabling environment that would make insurance thrive so as to attract investors into the industry. This can be achieved when there is increasing trust in insurers, data revolution in the industry, and favourable insurance policies.

Oloko advocates shying away from the protectionist to a collaborative approach as a step to unveiling opportunities that would attract investors.

“Regulation needs to move with the times. Yes, regulation is always behind innovation, but the regulators need to move from a protectionist approach to a collaborative approach especially as we play in the ‘new normal’. There are opportunities in the space no doubt, but they can only be unlocked via technology, innovation, and a changed mind-set. The regulator also needs to set the tone about the necessity of claims payment. There is a trust issue in the market right now and it mainly stems from issues around insurers not fulfilling their obligation to pay claims when risk insured against occurs. On the government side, one of the major things that could help the industry is access to data; Vehicle data, citizen data, mortality data, housing data, etc. Creating that data infrastructure would go a long way. Also, the Insurance Act needs to be updated to recognize the current realities,” Oloko stressed.

In addition, Gam-Ikon calls for a review of the guidelines on investment and other aspects of the insurance law as a means to draw investment into the industry.  “Government simply needs to begin to pay more attention to insurance and risk management in its efforts at economic recovery and stabilization. If the insurance sector has proven to play a critical role in enabling businesses to continue their operations and be in positions to meet statutory obligations like payment of taxes, yet governments at national and sub-national levels are ignoring it, then we are not addressing the issues holistically.

“Over the years, investors into the insurance industry have been discouraged by the demand for an increase in the capital base without any corresponding review of the guidelines on investment and other aspects of the insurance law. So we are only hoping that this latest attempt at amending the insurance law succeeds; the existing and potential investors are waiting,” he said