Financial Inclusion Back



Africa is home to 15% of the World’s population but generates barely 1.5% of global insurance premiums. Nevertheless, a number of indicators point to rapid future growth in the sector: the continent’s economic momentum, the emergence of a middle class, and the development of new distribution channels. According to the 2018 PriceWaterhouse Coopers (PWC) report property and casualty insurance are expected to grow by a compound annual growth rate of 4.3% between 2017 and 2025, much higher than projections in more mature markets. 

According to Swiss Re Institute Sigma's latest report, in 2017 the continent's premiums rose by 12.26% against 4.01% globally. Total underwritten premiums in Africa amounted to USD 66.7 Billions in 2017 compared to USD 59.4 Billions in 2016. Non-life insurance increased by 9.27% at USD 21.8 Billions, while life insurance grew by 13.7% from USD 39.5 Billions in 2016 to USD 44.9 Billions in 2017.

South Africa is by far the largest African insurance market, generating 66% of total premiums (US$ 44billions). But the share of South African premiums is shrinking as North and East Africa gain in relevance. The share of South African premiums fell from 76 % to 66 %, between 2011 and 2017 while the combined market share of Algeria, Egypt, Morocco and Tunisia increased from 10 % to 13 %. Kenya’s growth over the same period is impressive, achieving a market share of 3.2 % in 2016, up from 1.5 % in 2011. Nigeria, Angola, Namibia and Mauritius complete the top 10 African insurance markets, which together accounted for US$ 55.1bn or 91 % of total African insurance premiums in 2016.

Insurance growth patterns in Africa are diverse: In Morocco, Ethiopia, Kenya, Tanzania and Zimbabwe insurance premium volume increased by more than 5 % in 2016. By contrast, Algeria (-3.5 %), Libya (-6 %), Malawi (-14 %), Mozambique (-5.8 %), Namibia (-0.5 %) and Nigeria (-11.4 %) experienced declining real premiums. (Africa Insurance Barometer Market Survey 2018). With €1.4 billion worth of premiums written in 2014, Francophone countries in West and Central Africa provide a unique example of sector-based regional integration. Since 1992, thanks to CIMA, insurance markets in 14 countries in the zone (i.e., members of the West African Economic and Monetary Union (WAEMU) and Economic Community of Central African States (ECCAS) ) have been governed by a single insurance code supervised by a common supervisory body.

The insurance market structure in African countries remains dominated by the general insurance sector which accounts for more than two thirds of the total volume of business and only the remaining third is attributable to the life insurance business. Ultimately, a major section of the insurance activity continue to come from compulsory lines of business, primarily motor and health

Despite Africa’s relatively small share of the global insurance market, a number of international brokers and major European insurers have moved into the region, attracted by healthy loss ratios due to African insurers’ relatively low exposure to major risks.

The African insurance market is mainly organised around brokers, insurance companies and reinsurers. Brokers in domestic markets focus mainly on individual risks, local SMEs and public and para-public sector business. 90% of corporate insurance business is handled by international brokers who have been advising their clients on investing in Africa for many years and they have set up insurance programmes with insurers present on the Continent. Because of the capital adequacy constraints imposed by the Regulator, the number of domestic insurers will probably decline in the coming years and those that survive will do so by marketing highly innovative products to niche markets. Lastly, the big global reinsurers are very active in Africa alongside regional or national reinsurers as they are needed by the insurance companies to provide additional cover, particularly for major risks.

A number of indicators point to rapid growth in the individual risk segment. Aside from the Continent’s economic promise and demographic momentum, the emergence of the African middle classes and the development of new distribution channels are a big opportunity for the sector.


According to a PWC annual survey of the main insurers in Africa, since the global financial crisis in 2008, over-regulation has repeatedly been mentioned as the most dominant concern for insurers. However in their 2018 survey, technology overtook regulation as the top issue. But, IFRS 17, the new international accounting standard for insurance contracts, will add another significant regulatory burden whose impact should not be underestimated. Also, following the introduction of Solvency II regulations in Europe, which became effective in 2016, countries in Africa, like South Africa, are also introducing Solvency II equivalent risk based prudential and market conduct regulations across their financial services industry. Further costs and transformational changes required by the introduction of IFRS 17 will add new challenges. For example, data, business processes, and the need to explain the results to stakeholders will all come at increased cost and require more staff.

Agricultural insurance has huge potential for development in Africa. It remains, nonetheless, a precarious and largely untapped sector with very limited insurance products available on the market. The overwhelming majority of agricultural holdings are deprived of any kind of protection against climate hazards. in 2015, out of the 178 million farmers in developing countries, having underwritten index insurance in 2014, only 450 000 are African, that is, 0.25%.

The average African (outside South Africa) only spends 70 USD a year on insurance, compared to 1,000 USD in South Africa and 2,700 USD in Western Europe. There are also high regional disparities across the continent: with the exception of South Africa which has a market penetration rate of 14%, the ratio of insurance premiums to GDP is barely 1%. This lack of enthusiasm for insurance is down to several different factors: low purchasing power of the population; absence of an “insurance culture”, the fact that there is no mandatory insurance for mass risks, the absence of innovation and pricing regulations, and a sometimes haphazard approach to processing claims that promotes a negative perception of insurers. Consequently, only mandatory types of insurance (i.e., auto insurance, or repatriation or medical insurance linked to visa applications, etc.) have been taken up by the more affluent sections of the population.

The lack of development in bank account penetration (Only 38% of adults in Africa, less than 15% in the WAEMU zone) is also hindering the growth in bank insurance – compared to a highly developed distribution channel in Europe that enables insurance products to be distributed to bank customers.


While the unrelenting regulatory changes come with increased costs and implementation challenges, they also present hidden opportunities for insurers to reassess risks, reconsider where they allocate capital, review their business models and products, and the way these are distributed. In addition additional regulations can be beneficial, as the increased risk management requirements force smaller insurers to consolidate, achieve scale, and broaden their insurance market offerings.

The new Microinsurance framework in South Africa for example brings opportunities to increase access to customers who would have been too costly to do business with under the mainstream Insurance Act and Regulations.

As major players in micro-insurance and constituting a burgeoning distribution channel, mobile phone operators are central to future distribution strategies. Mobile phone operators reach more Africans than any other distribution channel. For the insurance market, this vehicle offers a number of advantages. Mobile banking makes it possible, easy and at low cost, to remotely collect and divide up small premium amounts into instalments tailored to micro-insurance. Claims payments can also be made this way, more simply and rapidly than in the traditional sector, enhancing consumer confidence. Furthermore, phone operators generally enjoy a better image than insurers. Their network of agents means they also have an unrivalled presence in rural areas. Recent insurance-centred initiatives include the announcement of the partnership between Axa and Jumia (a major e-commerce operator in Africa). Kenya’s agricultural Islamic insurance product Takaful, launched in 2011, simultaneously uses satellite images to automatically detect drought areas (without insurance claim notification) and mobile banking technology to pay premiums and claims. This innovative product is helping to embed the insurance culture on the continent. (PWC 2018 Africa Insurance Report).

Although brokerage is still the most widely-used insurance distribution channel, notably for corporate business, other channels are also beginning to emerge, starting with bancassurance, i.e., the sale of insurance products through banking networks. For Africa as a whole, the market penetration rate is around 2%, however it rises to between 10% and 20% among bank customers. Individual risk products are increasingly being marketed via banking networks, both by the retail banks themselves and by microfinance organisations.

Agricultural insurance has shown positive developments in the past years. In 2011, an insurance plan called Assurance Récolte Sahel (Sahel crop insurance), (ARS), was launched in West Africa by the World Bank and several other local and international institutions. This project was designed to establish an index-based insurance for the coverage of drought risks. This scheme is now under experiment in four countries: Senegal (peanuts, corn), Mali (cotton, corn), Burkina Faso (cotton, corn) and Benin (corn). The development of agricultural insurance in East Africa has proved to be all the more significant as important droughts occurred in the past years in the Horn of Africa.  According to the Food and Agriculture Organization of the United Nations (FAO), Over 17 million people living in Ethiopia, Eritrea, Djibouti, Somalia, Uganda, Kenya and South Sudan are under the threat of famine. Agricultural insurance represents a key solution to overcome this threat.

In November 2016, the first agricultural insurance crop policy was marketed in Tanzania, a country where agriculture contribute to more than 30% of the GDP. Called “Linda Mbegu”, in English “insure your crops”, this plan is designed to protect farmers against the consequences of rainfall shortage. (Source: Atlas 2018 Insurance Magazine).


Jun 16, 2021
The United Nations is urging reforms that make it easier for migrants to send money back to their home countries, as it observes its annual International Day
Jun 08, 2021
The World Bank Board has approved a new financing to increase productivity and market access for smallholder farmers and agri-enterprises in Liberia.
Feb 22, 2021
More than a year since Africa recorded its first confirmed case of the Covid-19 vir
Feb 10, 2021
To fight poverty and improve productivity, small-scale farmers who are facing financial constraints and trapped in a subsistence wa
Oct 18, 2021 - Oct 22, 2021
Kigali, Rwanda
The African Microfinance Week (SAM -Semaine africaine de la microfinance in French) is a conference dedicated to the development of financial inclusion in…
Sep 22, 2020
Dear Readers, I hope this message finds you well. It is an honour for me to assume the role of the Making Finance Work for Africa (MFW4A) Partnership…
Sep 21, 2020
The COVID-19 pandemic has greatly disrupted economic activity around the world and significantly affected global financial conditions. Experts predict that the…
Jul 28, 2020
This page presents measures and initiatives by the Togolese government, national central bank and Development Finance Institutions (DFIs) in support of a…
Oct 18, 2021 - Oct 22, 2021
Kigali, Rwanda
The African Microfinance Week (SAM -Semaine africaine de la microfinance in French) is a conference dedicated to the development of financial inclusion in…


Dear Readers, More than a year since Africa recorded its first confirmed case of the Covid-19 virus in Egypt on 14th February 2020, and there…
INTRODUCTION The advent of digitalisation is changing the environment of financial institutions (retail banking and life and non-life insurance…


Jun 17, 2021 | MFW4A, AMENET
Jun 16, 2021 | Ibrahim Chaibou Oumarou, Mayoukou Celestin | Scientific research publishing
Jun 01, 2021 | Kahihu Peter Karugu, Wachira D. Muturi, Stephen M.A. Muathe | Journal of Applied Economics and Business

Strategic Partners