Africa, the second fastest-growing insurance market in the world, is set to take off, according to a report published recently by McKinsey & Company, which presents an overview of the insurance landscape in Africa and notably the role that the pandemic is playing in accelerating the shift toward digital.
The African insurance market, currently valued at $68 billion measured by gross written premiums with a highly astonishing growth, presents characteristics of a highly fragmented market and is maintaining inconsistent distribution among countries. In fact, markets are inconsistent in terms of size, mix, growth, and degree of consolidation, with 91 percent of premiums concentrated in just ten countries : South Africa, the largest and most established insurance market, accounts for 70 percent of total premiums. Beyond South Africa, McKinsey identifies six “primary insurance regions in Africa”: Francophone Africa, Anglophone West Africa, southern Africa, North Africa, East Africa, and Angola.
According to the McKinsey & Company report, competition among players has already led to significant innovation and disruption in the African insurance market, with insurers leveraging technology to target to cut costs and start to digitize customer journeys and in order to meet rising demand for digital solutions, Insurtechs have been quick to step in.
The COVID-19 pandemic played a major role in accelerating the shift toward digital, in fact, according to the report’s authors, The COVID-19 crisis means that digital-first for customers and intermediaries is no longer a choice but a necessity and as a result and leading players are moving quite aggressively on direct and digital.
Although The COVID-19 pandemic has created various economic pressures, the fundamentals for insurance growth remain solid. According to the report now is the time to think more deeply about defining a strategic approach that leverages partnerships while driving innovation across products and channels, expanding services, and upskilling the workforce, and doing so, insurers will be strongly positioned to take advantage of the vast, and underpenetrated, African markets.