Africa Positioned To Become Digital Insurance Leader

With the ongoing advancement in Internet and mobile penetration across Africa, the continent is set to become the leader in digital insurance ahead of traditional markets, such as Europe.

Speaking at the 44th annual Insurance Conference in Sun City, South Africa, Monday, Allianz SE CEO Oliver Bate said that the growing Internet connectivity and availability of regulations that favor innovation in financial services have put Africa in a better position to become the digital insurance leader of the future, according to the Financial.

“While traditional markets, such as Europe, are struggling with their digital transformation process, Africa is digital by nature. Mobile is the fastest growing sector and innovation enabler on the continent with an expected 1.2 billion African subscribers by 2018,” said Bate.

He further warned that in today’s fast changing world, it is critical for individuals and entities to rapidly innovate and change course swiftly if necessary.

Bate added that the ongoing transformation in the insurance industry has been necessitated by the all-inclusive impact of digitalization, which has brought new trends and a growing number of disruptors, giving customers new expectations.

“Today’s customers will choose a product primarily because it’s easy to use, transparent in terms of price and quality, and personalized – and because it’s available to them via the digital channels they want it from,” Bate said.

His firm, which has been offering insurance services in Africa for the last 16 years, plans to dedicate its digital activities to expanding its customer reach with a special focus on key growing markets where insurance penetration is still low.

It also plans to improve its efficiency in African markets that already have higher insurance penetration.

“Digitalization allows us to gain considerably better insights in to our individual and institutional customers and thereby to better serve their needs,” Bate noted, adding that they will be leveraging their global footprint and extensive expertise to cement their position in the African market.

A Giant Waking Up

Owing to the growing middle class and big infrastructure projects popping up across Africa, the African insurance market has been described as a “giant waking up.”

Experts say there is a real buzz about the insurance sector all over the continent due to the immense opportunities it presents.

According to Lucas Mueller, the head of North and Sub-Saharan Africa at reinsurer Swiss Re, the insurance market is closely linked to economic growth, with a rise in incomes bringing more insurable assets. He describes the sub-Saharan African insurance market as a “diverse market.”

For example, South Africa accounts for almost 80 percent of all insurance premiums in sub-Saharan Africa, with an insurance penetration rate — the total value of insurance premiums as a share of GDP — of about 13 percent, which is well above the average in the developed world.

Kenya is also among the most advanced in the rest of Africa, with a penetration rate of 3 percent, while Nigeria is about 0.3 per cent, even though it is the continent’s largest economy.