Activity in Africa’s insurance market is on the increase

Africa’s insurance market is the most underserved in the world — but activity in the sector is on the increase, a trend that could signal a new phase of growth.

A number of insurance firms— including German giant Allianz — are either consolidating their operations, entering into joint ventures, rebranding or tapping into technology to widen their presence or scope of product offerings, in battle for a share in the nascent but growing market.

A Sanlam-Allianz tie-up is the latest joint venture in the market, combining the German giant, present in 170 countries, with the largest insurance company in Africa. The venture will see the two firms combine their Africa operations to form one of the largest non-banking financial service entities on the continent, with a combined group equity value of €2-billion.

Last month, Allianz acquired a controlling stake in Jubilee General Insurance of Tanzania, the fourth acquisition in two years after Allianz agreed to take up a controlling stake in Jubilee Holdings’ short-term business, covering property/casualty in five African countries, with the acquisition of a Mauritian business the final transaction, pending regulatory approval.

The Sanlam-Allianz joint venture will boast a presence in 29 countries and aims to increase life and general insurance penetration, accelerate product innovation and drive financial inclusion in high-growth African markets, the statement said.

Other activity in the sector includes a rebrand for Old Mutual. After seven years of trading as UAP Old Mutual, that joint venture has begun a phased rebrand to market itself as one brand — Old Mutual — in the East African market. The rebrand will allow this “African-born” entity that has operated on the continent since 1845, to tap into “a growing regional investment and business hub”.

Like Sanlam-Allianz, Old Mutual has also affirmed its commitment to grow into a pan-African entity through product innovation and providing cover for multinationals.

“East Africa is growing as a regional investment and business hub, with this growth comes new opportunities for alternative investments, innovation, and expansion, and as Old Mutual Kenya we are ready to partner with Kenyan customers, communities, and stakeholders to ensure we harness this potential,” Allianz said.

Operations in Rwanda are already being rebranded to Old Mutual and this will be followed by Kenya, Uganda, South Sudan and Tanzania operations, an exercise expected to be complete in 2023.

Also angling for the East African market is the Mauritian Insurance company, MUA, following its takeover of the non-life activities of Saham Kenya and the successful integration of the two entities in 2021.

MUA has operations in Mauritius, Kenya, Tanzania, Uganda, Seychelles and Rwanda. With the consolidation of its Kenyan activities, it hopes to increase its share in the market and is banking on its pan-African outlook and brand (it was previously a part of Sanlam) to win customers. 

The Research and Markets firm projects Africa’s insurance market to grow at a compounded annual growth rate of 7% to 2026, and is seen significantly raising its value beyond the $70-billion recorded in 2020.

Among the key factors driving the industry in the African region, the research firm says, is the opportunity of entirely untapped markets, both to regional and global players.

“Key players from the global market seek to exploit these untapped regional opportunities, along with exploring ventures in concentrated markets,” according to Research and Markets.

South Africa is considered a highly competitive market because of the presence of well-capitalised local players, who currently control 70% of the continent’s insurance premiums, according to MacKinsey.

South African health insurer and Africa’s second-largest insurer, Discovery Limited, broadcast its intentions in the pan-African market by announcing the availability of its health insurance cover in five new African markets — Zambia, Nigeria, Ghana, Kenya and the Democratic Republic of the Congo. — bird story agency

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