The African insurance market presents significant opportunities for industry participants, driven by the rise of insurtech and fintech start-ups, alongside robust population growth and low levels of insurance penetration, according to a report by Deloitte.
It disclosed that the growing and youthful population of Africa, specifically sub-Saharan Africa, which was projected to grow from the current 1.2 billion to 2.5 billion by 2050 and the projection on the cell-phone penetration growth rate of 50 by the end of 2025, further create opportunity for the insurance industry in Africa.
The report authored by Takalani Sikhavhakhavha, Senior Associate Director, AIS Deloitte Africa and Lauren Lanz, Senior Manager, AIS Deloitte Africa, said although the COVID-19 pandemic might have delayed the anticipated boom in the African insurance market, yet it had also highlighted the industry’s resilience and potential for growth.
The report said players in the insurance industry could rely on mobile phones to create micro insurance for the unreached and underserved segment of the insurance market.
The report also noted that innovative insurance players were addressing low insurance penetration, leveraging technology to offer tailored products and enhancing customer experiences.
“Players without an insurance license are increasingly moving into the insurance space, competing with existing insurers and providing new ways of servicing and reaching customers. Regulators are creating supportive environments that promote innovation and financial inclusion, which could ultimately lead to increased insurance penetration,” the report revealed.
Deloitte said apart from South Africa, where the insurance penetration rate was at 11.54 per cent, the rest of the continent remained relatively untapped.
It underlined that Africa had been attracting several innovative start-up insurance companies aiming to bridge the insurance gap.
“These start-ups have been leveraging mobile technologies to provide micro insurance solutions to underserved and previously unreachable customers. They offer affordable, sometimes instant, and accessible insurance coverage, including life, health, and crop insurance, reaching millions of previously uninsured individuals,” Deloitte stated.
The report further indicated that governments across Africa were recognising the potential of insurtech and fintech start-ups in driving financial inclusion and economic growth.
“Regulatory sandboxes and innovation hubs are being established to foster collaboration between start-ups and established insurance companies,” it revealed.
For example, Deloitte said in South Africa, the Financial Sector Conduct Authority (FSCA), had launched an innovation hub to support insurtech and fintech start-ups, facilitating regulatory compliance and fostering industry partnerships, saying that helped to create an environment that promoted increased insurance penetration and encourages innovation by players in the industry.
Globally, Deloitte mentioned that there was an increasing trend for businesses from different sectors to converge.
