Insurance gap will hinder growth in Africa, says AGCS head

If insurance penetration does not catch up to economic development in Sub-Saharan Africa, the heightened risk will cause economic growth to stall, according to Allianz Global Corporate & Specialty (AGCS) chief executive in Africa Delphine Maïdou.

Speaking at the the risk management conference, ‘Sub-Saharan Africa: The Next Generation of Emerging Markets’, in London last week, Maïdou warned that insurances needed to keep pace with investment and economic development in Sub-Saharan Africa.

She said: “Sub-Saharan Africa’s continued growth depends on closing its vast infrastructure and skills gap, which needs innovative credit and investment solutions facilitated by public private partnerships through a clear policy and legal framework. But for these solutions to work, they will require equally appropriate risk management and risk transfer solutions – which essentially means increasing insurance penetration.”

Maïdou, who is also president of the Insurance Institute of South Africa (IISA), further pressed the ‘huge potential’ for business insurance in the region.

Despite lower commodity prices and the slowdown of the Chinese economy, as well as strains in some large emerging economies, the economy in Sub-Saharan Africa is expected to grow by 4% in 2016.

However, even the region’s largest economies are not keeping pace. Nigeria, with Africa’s largest GDP, has an insurance penetration of only 0.6%. However, with its population of 170m and its buoyant economy, Nigeria has all the ingredients for a thriving insurance.

Maïdou added: “Innovative and agile insurance solutions can help businesses in Nigeria and the rest of Sub-Saharan Africa. There are numerous ways to close the protection gap to mitigate business risks. Both traditional insurance and the new generation of alternative risk transfer solutions can be used to find the right responses to an increasingly complex risk environment.”