2013-01-21 15:02:03 -
Insurance markets in Africa’s 54 countries are diverse, reflecting disparities in economic conditions and the approaches of the policymakers in individual countries and regional blocs, according to a new report from A.M. Best Co.
In the report entitled, “Africa’s Diverse Insurance Markets Offer Growth Opportunities, Untapped Demand”, A.M. Best describes how the African (re)insurance market offers potential for growth, given anticipated development of gross domestic product (GDP) in the region.
Each country has different drivers for heightened insurance demand, ranging from economies dominated by the oil and gas and mining industries, to large populations.
Carlos Wong-Fupuy, Senior Director, Analytics, said: “Countries with stronger economies—often driven by the energy sector and mining—have enjoyed greater demand for insurance, while affordability remains an issue in
poorer African countries.” He added: “Various factors and commonalities between some of these countries have encouraged a number of regional and pan-African initiatives and relationships among some market participants.”
A.M. Best’s new report also identifies challenges faced by African (re)insurers. These include competitive environments and the ongoing global financial uncertainty and political risk in many parts of the region. Increases in minimum capital levels have resulted in some industry consolidation, although A.M. Best still considers some markets to be crowded.
The report examines three of Africa’s largest insurance markets.
- The South African insurance market reflects its mature life insurance sector and developed economic base. Some large domestic insurers increasingly are seeking to diversify outside of South Africa and, in certain instances, beyond Africa.
- Nigeria has the largest insurance market in West Africa, as the oil and gas industry has fueled economic development and demand for energy infrastructure projects. The insurance market has seen consolidation driven primarily by higher capital requirements, although A.M. Best believes there is room for further mergers and acquisitions.
- Kenya hosts the largest East African insurance market, although (re)insurers have faced significant challenges, including lower investment earnings, largely as a consequence of volatile equity markets and high inflation. Competition is intense, owing to government-related clients enjoying strong negotiating positions.
Yvette Essen, report author and Director of Industry Research, Europe & Emerging Markets, added: “Insurance penetration in Africa is growing, but from a very low base. Insurers are attempting to make insurance more accessible through microinsurance and, to a lesser extent in certain countries, through Takaful product offerings that comply with Islamic Shari’a law.”
To access a complimentary copy of this report, please visit www3.ambest.com/bestweek/purchase.asp?record_code=208535
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A.M. Best Company, Inc.Carlos Wong-Fupuy, +(44) 20 7397
0287Senior Director, Analytics firstname.lastname@example.org
: mailto:email@example.com orYvette
Essen, +(44) 20 7397 0322Director, Industry ResearchEurope
& Emerging Markets firstname.lastname@example.org
: mailto:email@example.com orEdem
Kuenyehia, +(44) 20 7397 0280Associate Director,
Market Development & Communications firstname.lastname@example.org
: mailto:email@example.com orJim
Peavy, +(1) 908 439 2200, ext. 5644Assistant Vice
President, Public Relations firstname.lastname@example.org