With its youthful population, expanding middle class, rampant smartphone adoption and a bigger diaspora migrating back home, Africa’s insurance market has newly emerging power. And, as chief executive of Allianz Africa, part of Allianz Group, the global insurer, Delphine Traoré is understandably bullish on the region’s prospects.
One reason for her optimism is the continent’s relatively low insurance penetration rate: it stood at under 3% in 2019, compared with the global average penetration rate above 7%. However, the prospects for growth are immense, especially for digital insurance platforms, given recent political upheavals, natural disasters and the economic dislocation caused by the fallout from the coronavirus pandemic.
“The African insurance industry is growing faster than [most of] the rest of the world,” aside from Latin America, said Traoré in an interview at her office in Abidjan on the southern Atlantic coast of Côte d’Ivoire in West Africa.
Allianz has more than a century of history in Africa, where it has built and is continually expanding its footprint, currently present in 12 countries across the continent.
When it comes to insurance penetration in the region, South Africa is by far the biggest player, with about 70% of the continent’s total market share. Next is Morocco, then Kenya, Egypt and finally Nigeria, where penetration is just 0.5%. Reflecting on these huge gaps in insurance coverage between countries, Traoré sees an increasingly important role for public-private partnerships in driving up adoption and, by extension, growth and profits for Allianz.
This could be especially important for the large commodity exporters, such as Nigeria and Angola. “Most of the farmers across Africa are not insured,” Traoré said. “When there’s a major drought, that pretty much paralyzes a country. You could be buying insurance, as a state, to be able to come to the rescue of your people.”
Such a partnership would, therefore, be vital in tackling climate change risks, which are especially salient for Africa. Unpredictable weather patterns are already contributing to food insecurity and population displacement as well as putting a strain on water resources, which hits the most vulnerable the hardest.
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