Insurers switch focus to Pan-African growth

Insurers in the region are angling for regional growth as the financial industry sub-sector moves to tap the economies of scale.

On May 4 this year for instance, Sanlam and the world’s largest general underwriter Allianz agreed to combine operations across Africa to create the largest Pan-African non-banking financial services entity on the continent.

Earlier on in September 2020, Allianz entered a Ksh.12 billion ($100m) transaction to purchase the general insurance business of Jubilee Holdings across East Africa and Mauritius.

Meanwhile, at the end of last year, leading global insurer Prudential announced it would headquarter its African operations in Kenya by entering the Nairobi International Finance Centre (NIFC).

Africa’s attraction to insurance players is not just limited to insurers only but also re-insurers and other intermediaries.

With Kenya being the second largest insurance market after South Africa, any key transactions in the sector are expected to hit home.

The allure for scale by insurers is mainly driven by the potential presented by the liberalisation of commerce and movement following the entry of the Africa Free Continental Trade Area (AfCTA).

“As the AfCTA takes shape and is ratified in the region, we want to make sure we can provide the right cover so Kenyan companies can export to the rest of Africa without the fear of not getting paid and vice-versa,” Africa Speciality Risks Chief Executive Officer Mikir Shah told Citizen Digital.

Last month, regional insurers met in Nairobi for the Africa Insurance Organisation Conference representing the first major in-person meeting for the industry leaders since the pandemic.

Mr. Shah stewards a re-insurance Group which has operations in Mauritius and Bermuda, even as it underwrites risks on behalf of insurers in India, Hong Kong and the UK.

For him, understanding the scope of insurance on the continent is critical to deepening insurance penetration and growth for underwriting companies.

“For us, it is important for the whole market to understand that we are up and running and that we have already been writing business for a while now and are open to working with other insurers and re-insurers,” added Mr. Shah.

Mergers and acquisitions & partnerships are likely to define the insurance sector going into the medium term as overseas underwriters’ also eye a piece of the African insurance cake.

For instance, Prudential said it is looking to expand into medical underwriting in its African markets including Kenya.