The penetration of insurance on the African continent has been a problem for many years. Yet Africa has some of the fastest growing economies in the world, and the potential for the growth of insurance on the continent is massive. This was the topic of discussion on the first day of the African Insurance Exchange which was held at Sun City.
Africa on the move
The conference was opened by the CEO of the Insurance Institute of South Africa (IISA), Thokozile Mahlangu who said that it is time for Africans to stand up and make a difference in the world.
It has never been a better time to invest in Africa. Dr Joachim Wenning – Group Chair of Munich RE – pointed out that Africa is on the move, and the economic growth goes beyond seeing the changes within the city’s landscapes.
“Africa is ready for the world, and the rest of the world is willing to invest in Africa. Yes, the continent has challenges, but this is not unique. We just need to find a way to address these challenges effectively,” said Dr Wenning.
Technology is the key
If there is going to be any economic growth on the continent, there needs to be a massive drive towards embracing technology.
“Many Africans never grew up with a landline phone; yet, they have smart phones. We are living in an interconnected world where we know a lot more about our clients then we used to. And this is amazing,” said Dr Wenning.
He added that technology has a role to play in the mitigation of risk in the future. The long-term supply of water will be a major challenge in the future as will farming. Africa has the greatest area of arable land, yet water supply to these areas is often scarce.
“The role of the insurance industry is to ensure that there is a decent standard of living for communities. It is important that we put our hands up to help find resolutions to the challenges that we face,” said Dr Wenning.
And this is being done. Kenya is a perfect example of technology in action. A significant portion of the country’s gross domestic product cash flow is done through MPESA, and it is currently easier to pay for a taxi in Nairobi than it is to pay for a taxi in London.
Don’t forget the middle classWe have often heard that insurance is the realm of the so called one percenters, the segment of the population who are typically your higher income earners and can afford insurance.
However, economic growth has created a growing middle class, and it is this segment of the population that needs to be protected the most.
“From an insurance point of view, it is important that we do not ignore the middle class. The lower end of the middle class is at the greatest risk to change. A middle class that is confident in their future can drive economic growth. We have seen this in Germany as well as many other parts of Europe,” said Dr Wenning.
So, who are the winners and losers when we look at insurance within the African perspective?
“The winners will be the insurers who can dramatically improve their product levels. We need to align our products with changing consumer needs, we need to offer improved service offerings to a customer that has grown up in the digital age and we need to enhance our client touch points along the insurance journey. It is no longer just about being there for clients at claims stage,” said Dr Wenning.
He added that the future winners within the race for African growth need to embrace technology and master it to the best of their abilities.
“Providing cyber coverage is about staying relevant and ahead of the trends within the industry. Insurers need to invest in the skills that will be necessary to fight against cybercrime. We are all aware that the challenge ahead of us is significant. However, there are abundant opportunities on offer, no matter how hard the task seems,” said Dr Wenning.
Africa will continue to grow regardless of whether insurers are ready or not. Statistics show that the continent is growing (economically) by 4.2% on an annual basis. Further, the same statistics show that Africa will outstrip the growth of other countries in the world by 2030. This includes many of Europe’s big economies. Is the insurance industry on board? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts email@example.com.
Article published courtesy of FANews