This document outlines the findings across a series of studies commissioned by FSD Africa on the state of insurance innovation and regulation in eight countries in Sub-Saharan Africa (SSA): Ethiopia, Ghana, Kenya, Malawi, Nigeria, Rwanda, Uganda and Zimbabwe. It aims to inform regulatory authorities across the continent in the quest for balancing the mandate for market development and innovation with that of consumer protection.
Cross-cutting challenges to market development highlight untapped market potential. Across the study countries, low insurance penetration rates persist. Though the share of life insurance premiums in total premiums is growing, the market is for the most part still dominated by non-life insurance, and compulsory insurance plays a strong role. The result is that the voluntary retail insurance market still reaches a limited number of policyholders, and that large population segments such as rural inhabitants, informal sector workers and MSMEs remain un- or underserved. This indicates substantial untapped market potential in all the study countries.
More – and different – innovation needed. While innovation is present in all the study countries, each country is at a different stage along the innovation journey, depending on its unique country and market context. Some insurers have started to digitalise their processes and client engagement journey, and COVID-19 has provided an added impetus to do so. Some are implementing or pursuing alternative distribution partnerships, and some are doing market research to help target new market segments such as MSMEs. Partnerships with insurtech firms are emerging to help streamline internal systems and processes. On the whole, however, the cross-country innovation assessment shows that innovation is not yet entrenched in the fabric of the market or leveraged to reach underserved target market segments at scale.
Key constraints to innovation
Various elements of the enabling environment or ecosystem shape the current innovation picture.