African insurance operators have been charged to roll out attractive and innovative products that target the informal sector if the industry is desirous at ensuring that majority of the people embrace insurance as expected.
Ghana’s Commissioner of Insurance, Ms. Lydia Lariba Bawa, made this call during the 37th annual ordinary meeting of African Reinsurance Corporation in Accra, Ghana recently.
She said the insurance operators must appreciate that majority of the people in Africa operates in the informal sector and they usually do not earn regular incomes.
She stated that the insurance sector can contribute significantly to national growth if the perennial problem of capital flight, low penetration and inadequate capacity are addressed.
She emphasised that insurers must continue rolling-out products that meet the needs of people in the informal sector because it is the only way to grow the insurance market in the continent.
“The insurance penetration in Ghana and most sub-Saharan African countries is below 2 percent. This is mainly because most insurance products and services in the sub-region tend to predominantly focus on the formal sector businesses, white collar workers who earn regular income and operate bank accounts.
“The irony, however, is that the majority of the population in the sub-Saharan Africa sub-region operate in the informal sector. They usually do not earn regular incomes nor operate bank accounts. Until we find suitable ways of reaching out to such people, it will be extremely difficult to grow penetration,” she stated.
In spite of the fact that the African insurance industry has undergone tremendous changes over the years, she reiterated that there are still some significant challenges inhibiting its growth and development.
Apart from low penetration, she lamented that the insurance industry in the continent suffers from very low retentions that lead to excessive premium flights through overseas reinsurance.
Addressing the shareholders of the reinsurance firm, the company’s Chairman, Hassan Boubrik, said the net profit of Africa Re stood at $118 million in 2014, representing a 40 percent increase over the previous year’s figure of $84 million.
He also disclosed that the corporation grew its premium income by 7 percent to $718 million in 2014; while investment income and income from other sources, including interests on reinsurance deposits, stood at $50 million in 2014, up from $46 million in 2013.