Insurance pricing increases yet to reach many of those on the ground across Africa

Increases in reinsurance pricing are not necessarily filtering through to those on the ground in Africa, as a lack of understanding and competition keeps prices low at primary insurer level. That was the conclusion of a group of senior insurance and reinsurance leaders from across the continent attending a roundtable hosted by Afro Asian Insurance Services. Lawrence Nazare, CEO of Continental Re, said: “I think rates hardened for African reinsurers but this has not filtered down through the value chain. We saw significant hardening in both rates and terms – we are probably paying between 10% and 20% more than we did in 2020. But he added: “On the direct side we are seeing clients going along as if nothing has happened. We are even seeing attempts at getting discounts too. However, there is a lot more scrutiny of wordings from both reinsurers and insurers. Right now, we have seen claims of a magnitude that we would not have expected, so we are looking much more closely at our wordings and at what we are covering.” He is hopeful the sector is going back to the discipline of the past, predicting that more change will come for the rest of this year. However, Mr Nazare fears it will take longer to see actual hardening of the rates. Ryan Philips, managing director at Afro Asian Insurance, agreed: “There is a disconnect between reinsurance hardening and insurance hardening. This could lead to confusion and questions about if and when insurance rates in Africa will increase on the ground.” Meanwhile, Youssef Fassi Fihri, CEO of Société Centrale de Réassurance Morocco, cautioned against global players imposing blanket restrictions on cover, without necessarily factoring in the consequences for emerging markets. “Coal is very important for the African market, not just for the operators but also for insurers and reinsurers. Stopping capacity will not be sustainable,” he said. “Africa is not the culprit for greenhouses gases,” added Mikir Shah, CEO of Africa Specialty Risks. “But the bigger issue is that 600 million people do not have access to electricity and denying them access is totally wrong.” He said the question for the insurance sector is how to encourage new energy sources while also supporting coal and the transition away from carbon-intensive fuels. Udai Patel, chairman of Afro Asian Insurance Services, was quick to point out: “Lloyd’s has taken a very practical view of a gradual reduction up to 2030, recognising global trends of ESG but bringing in the commercial reality that you cannot just withdraw capacity overnight.” Mr Shah suggested this might be the opportunity for a rethink of how insurance operates in Africa and also for African insurers and reinsurers to step up and take on more of the risks themselves to support local economies. “We do need to think about new kinds of insurance,” he said. “Making triggers to pay out easier, making payouts easier, for example. Making claim amounts more discernible so we can see where our losses are,” he suggested.

Insurance pricing increases yet to reach many of those on the ground across Africa

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Related Articles