Zambia, Ghana and Kenya will offer the most attractive mix of rewards and risk for insurers over the next three years, while other Sub-Saharan markets will present new opportunities due to sustainable economic expansion and demographic transformation, said EY in its report, “Waves of change: revisited — insurance opportunities in Sub-Saharan Africa”.
The survey of 125 insurance executives and regulators in the Sub-Saharan region evaluated growth opportunities for insurance premiums and risk potential in seven key English-speaking markets in East and West Africa: Ghana; Kenya; Malawi, Nigeria, Tanzania, Uganda and Zambia. The risk and opportunity matrix was created by analysing economic conditions and potential hazards in each of the seven countries in the survey.
Zambia ranks first in Sub-Saharan Africa in growth opportunity for insurers, followed by Nigeria, Ghana and Kenya. Ghana offers the least amount of risk, followed by Zambia and Kenya. Nigeria, the continent’s largest economy, ranks seventh in the amount of risk posed to insurers.
Mr Steve Osei-Mensah, East and Central Africa Financial Services Advisory Leader at EY, said: “Significant population growth, rapidly rising incomes and the relatively low penetration of insurance products suggest great potential for both life and non-life products in Sub-Saharan Africa. There are also openings for insurers to introduce innovations in motor insurance, end-to-end mobile insurance purchases, consumer education and fraud prevention. While insurers will need to address challenges involving talent, market volatility, regulation and technological capacity, among others, there are opportunities for growth in the region.”
Despite lower oil and agricultural commodity prices and economic slowdowns in other parts of the world, the Sub-Saharan region’s economic outlook remains strong, the report said. Forty-one per cent of insurance executives and regulators surveyed believe GDP growth is the most important driver of future premium growth in the region. Product innovation (22%), regulatory changes (15%), competition (11%) and technological changes (10%) are the other key drivers of growth.
Larger populations and the movement of people from rural to urban areas are expected to also promote growth for insurers. The number of Africans joining the working-age population (ages 15 to 64) will exceed that from the rest of the world combined by 2035, according to the report.