Tuesday, January 18, 2022 UTC
Recognized by industry leaders for extensive coverage on African Asset Management
News > Funds > Markets and Industry News

Insurance sector a key source of capital for Africa

Anna Lyudvig
April 2, 2020, 2:55 p.m.
137

Word count: 395

Insurance firms are an important source of capital for investment on the African continent, according to Gilbert Anyetei, Alternative Investment Associate at RisCura.

Choose ONE Magazine and TWO Articles for FREE when you register an account
Share:

Insurance firms are an important source of capital for investment on the African continent, according to Gilbert Anyetei, Alternative Investment Associate at RisCura.

“They invest the premiums they receive from policyholders into capital markets to ensure they can cover claims. As such, they are key institutional investors alongside pension funds, development finance institutions (DFIs) and banks,” he said.

South Africa has a relatively high insurance penetration rate when compared to its emerging market counterparts and in relation to the sizes of their economies.

This emerged following the release of investment firm RisCura’s latest Bright Africa research.

Insurance penetration, which comprises life insurance and non-life insurance products, is calculated as a percentage of gross domestic product (GDP). It enables the comparison of different sizes of economies.

“South Africa measures up quite well and has the fourth largest insurance industry in the emerging markets group. The South African insurance market is supported by a sound regulatory environment, diversified multi-channel distribution and high level of local competition,” Anyetei said.

South Africa, at 12.89% has the highest insurance penetration of the emerging markets under review, far exceeding China at 4.2%, which came in second on this measure.

Of the frontier markets Namibia is the standout country, with a penetration rate of 7.25%, while Morocco’s rate is 3.88%, and Tunisia’s is 2.14%.

In Africa, Morocco, Nigeria and Zimbabwe experienced positive total premium growth in 2018 overall.

“South Africa experienced stagnant growth in its total premiums, but this is in line with the stagnant economic growth and high unemployment rates,” Anyetei said.

For Morocco and Nigeria, this was mostly driven by an increase in life premiums.

“The boost in life insurance in Nigeria is due to an increase in savings and protection-related financial products in that country,” he said,

Kenya experienced low premium growth mostly due to the country’s low insurance penetration levels (0.63%); which also stems from its low levels of urbanisation.

Just over half of the populations of the 37 African countries that form a part of the Bright Africa research live in rural areas.

When comparing the insurance industries of different markets around the globe, investment analysts also look at the gross insurance premiums written (GPW).  Africa’s GPW accounts for 1.56% of global GPW, according to the report. 

South Africa is the leader on the continent, with its GPW accounting for 0.93% of global GPW.

 

Registration Login
Sign in with social account
or
Lost your Password?
Registration Login
Sign in with social account
or
Registration Login
Registration