5 Key 2022 Insurance Trends for Africa

insurance trends for Africa

The anticipated new year is here and rolling already; what does Africa’s 2022 insurance outlook hold? Generally speaking, we know that there is much optimism for the insurance industry on the continent. 

Some of the reasons are the phasing associated challenges of the COVID-19 pandemic, new strains of the virus, developments in vaccination and booster shots in 2021 point to hope that 2022 might be the year to get out of the woods of slowed growth for the sector.

Despite the impact of the COVID-19 pandemic circa 2019-2020, Africa’s insurance market reached a valuation of US $ 70 Billion in 2020, and a report by IMARC Group expects the African insurance industry to grow at a (Compound Annual Growth Rate) of around 7% from 2021-2026. Here’s our 2022 Insurance Industry Outlook for Africa.

Increase in Premiums and Insurance Uptake

Many African economies are yet to be out of the woods from the post-pandemic impact of the virus. From Sudan’s 387.56% to Nigeria’s 17.59% inflation rates, policyholders across the continent will witness some increase in their premiums to enable their insurers to provide the much-desired cover.

Reports in Kenya say motorists are bound to see up to a 50% increase in insurance premiums for the comprehensive insurance policy for private and commercial vehicles. The country’s regulatory body (IRA) is reported to be pushing for increased premiums to prevent underwriters from making losses. 

Despite the projected rise in premiums, we expect to see an increased uptake of insurance covers. Compared to 2019-2020 with new insurtechs and pioneering partnerships for tailored covers, flexible pricing and payment solutions and easier access for consumers to buy insurance.

Rapid Adoption Digitalisation of Insurance Stack

For the past two years (2019-2021), the insurance stack has witnessed a lot of surge in technology revolution for the industry. This period saw many insurers look at their legacy technologies or processes and partially digitise some functions.

Partial digitalisation saw insurance adopt more focused online channels for marketing and distribution of insurance. There’s bound to be more rapid adoption of digitising the stack and functions of insurance. Rapid adoption and full adoption of digitalisation will enhance data-driven underwriting decision making, improve the ability to combat fraud and automate more ad hoc processes. 

It will help African insurer’s meet growing customer needs, leverage partnerships to increase portfolio profitability and lower administrative costs.

More Embedded Insurance

Embedded insurance is the next milestone in delivering personalised and seamless access to cover for consumers on the continent. The significant difference between online and embedded is that the latter fits into the consumer’s journey and helps insurers reduce their spending on marketing and sales.

Growing trends in embedded insurance across the continent will lead to more partnerships between incumbents and challenger brands. Insurance and non-insurance businesses will be partners to drive increased insurance uptake and create a new revenue stream for non-insurance companies at zero cost to them.

More incumbents will favour embedded insurance than their current sales and marketing drive for distribution when this happens.

More Insurtech Startups

2021 saw a lot of investments and insurtechs spring up across Africa. According to Statista, South Africa currently has the highest number of insurtechs on the continent (30), followed by Kenya and Nigeria. We predict a key insurance trend for Africa in 2022 is the growth of insurtech and insurtech solutions and more investment.

There is also bound to be more insurtechs and investment in the sector.

Regulation, Relators and Improved Policies

Insurance growth across Africa will be hinged on improved regulation and government policies that impact the sector. For example, In Nigeria, the country’s insurance commission is looking to implement strict adherence to the prompt payment of claims and fully implement the RBS model for inspection insurance entities within the country. 

In a recent statement by Mr Thomas Sunday, the Commissioner For Insurance and CEO of the National Insurance Commission (NAICOM), he said: “…we should know as a fact that insurance business is about payment of genuine claims and anything short of that will continue to hurt insurance business in the country…”.

Developments like this can inspire trust with consumers and help build a competitive sector driven by excellence.

See Automated and Virtual Claims Processing in Action

Niche Products and More Personalisation

Some examples of niche products and personalisation in Africa is the testing of using GPS and accelerometer of the policyholder’s smartphone to tailor their car insurance cover based on the individual’s driving behaviours. There’s health cover for just malaria treatment and consultation, which unbundled health insurance.

Niche and personalised insurance covers will open insurers to new data points and onboard new users to upsell other policy covers.

In conclusion, for consumers and insurers, the 2022 insurance trends for Africa point to a lot of innovation and growth for the sector. For Insurers to grow exponentially in 2022, they must seek out the right tech and processes that help deliver tailored and seamless customer solutions.

Whatever the 2022 insurance trends in Africa eventually turn out to be, we are confident it would be exciting. We wish you a fantastic year.

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