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You Are Here: Home » Insurance » Africa loses US$185b potential insurance revenue
Using Swiss Re’s Sigma 2007 global insurance report, Executive Vice-Chairman of Industrial and General Insurance, Mr Remi Olowude has put losses due from untapped insurance in the African continent at US$185billion.
The IGI boss spoke at the African Insurance Brokers Association conference in Lagos. He posited that on account of the continent’s population and economic potential, it ought to be contributing ‘at least’ US$243billion or 6% of the world’s premium income instead of US$68billion that is its share of the world’s insurance output.
Olowude pegged his assumptions on the “enormous potential and the level of investment inflow of foreign direct investments in the financial services sector and the extractive industries as well as the huge developments in telecommunications.”
He also sees as the overall most vital potential, the population of the peoples of the continent now estimated at 700 million or 14.8% of the world’s population scattered in about 6% of the earth’s land mass. For him, if Africa were to realise only part of the economic potential given the population and land mass, its current premium generation at 6% will translate to about four times its present scorecard.
Olowude buttresses his argument with the low loss ratio arising from low natural disasters, higher return on investment and other attractive indices the continent parades.
While laying emphasis on his Transformation Management of Insurance and Reinsurance Potentials in Africa at the AIBA conference, he affirms that the continent’s insurance and reinsurance markets have underperformed.
He blamed the situation on a number of factors including weak economies, political instability and poverty. In addition, Olowude says the products offered today by insurers do not meet the requirement of the needs of today’s African people.
Inadequate technology or none at all, sharp practices and low financial capacity are other factors that militate against growth in insurance.
The challenge, therefore, is to deepen the market’s capacity through reduction in capital flight and re-configuration of business flow between markets in Africa on one hand and developed markets and markets in Africa on the other.
Strengthening of corporate governance in organisations, innovative product offerings, human capital and increased awareness are some of the solutions proffered by Olowude.
Source: B&FT
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