How insurance is transforming a rapidly growing sub-Saharan Africa

Rising incomes, an expanding middle class and technology innovations are poised to drive dramatic premium growth.

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How insurance is transforming a rapidly growing sub-Saharan Africa

Africa is rising. A dramatic and sustainable economic expansion combined with an historic demographic transformation mean the insurance market in sub-Saharan Africa is increasingly attractive to global insurers.

To understand the opportunities and risks in both East and West Africa, we surveyed 125 insurance executives and regulators in seven key markets:

  • Kenya, Malawi, Tanzania, Uganda, and Zambia in the east
  • Ghana and Nigeria in the west

Several key themes emerged

  • Growth—Significant population increases, rapidly rising incomes and the relatively low penetration of insurance products suggest huge potential for both life and non-life products.
  • Challenges—Because insurance is marketed more than it is purchased, agent and broker training and consumer education are critical.
  • Risk—In some markets, an abundance of under-capitalized firms leads to excessive competition around price, rather than service, which erodes consumer trust.
  • Innovation—Beyond creating new sales opportunities, innovations spawned in Africa (e.g., mobile and cashless payments), may soon disrupt developed insurance markets.
EY - Risks and opportunities in African insurance Risk and opportunities in African insurance [infographic]

In conjunction with Oxford Economics, our insurance professionals analyzed the findings in terms of market size, demographic changes and projected growth, as well as macro-economic and political risk.

Our conclusions include:

  • The most attractive mix of market rewards and risk can be found in Zambia, Ghana, and Kenya through 2018.
  • New technologies—mobile, online, and collaborative tools—will help expand the market for insurance, but agents and brokers will remain crucial to selling to a rapidly expanding middle class that is generally unfamiliar with insurance products.
  • Despite the excitement surrounding micro-insurance, it currently generates only 33 percent of revenue; general insurance and life will continue to account for two-thirds of premium revenue through 2018.
EY - Seven key markets in East and West Africa [infographic] Seven key markets in East and West Africa: learn more about the growth, innovation, challenges and risks in each country [infographic]