Strong economic growth boosting life insurance sales

Countries in Sub Saharan Africa (SSA) are set to grow their life insurance and reinsurance industries on the back of strong economic growth – life insurance is often a precursor to a healthy general insurance market in emerging states. Filipe Nunes, head of life at Munich Re of Africa (MRoA), told attendees at the reinsurer’s 2019 Africa Life Conference that high GDP growth rates coupled with life insurance product innovation created the perfect platform for insurance-backed economic development on the continent. The prospect of market-beating returns from Africa has encouraged global reinsurers to reinvent their Africa strategies. “We took a detailed look at our business – at the opportunities on the continent – and how we could best contribute to Africa’s economic growth,” said Jose Nicolas, head of strategy: life at Munich Re SSA. He identified demographics as a primary driver for insurance and reinsurance industries on the continent, because there is greater potential to sell life insurance policies to larger populations. International reinsurers hoping to expand their reach in the SSA region must navigate three established trends, the Munich Re pair concluded. The first is the increased implementation by African financial market regulators of domestication policies, requiring local firms to place their insurance business with local or regional reinsurers rather than through international reinsurers. “Our approach to these policies is to partner with local and regional reinsurers and assist them with the technical support necessary to deliver appropriate solutions to end-users,” said Mr Nunes. These regulatory developments have created new opportunities for reinsurers under the second trend, namely the move towards capital solutions and financial joint ventures. “The 2008 Global Financial Crisis pushed country regulators to implement risk-based frameworks for their insurance markets, leaving us no choice but to react to the change,” said Mr Nicolas. MRoA is already expanding its financial and capital management solutions, presently offered mostly in South Africa, to other countries in the SSA region. Mr Nunes added that technology is an enabler for the support function that reinsurers would play in a future-fit Africa. The high level of smartphone penetration across the continent has encouraged technology-backed innovation in various industries, with financial institutions and telecommunications firms leading the charge. “We are in the process of developing a cloud-based online ‘group life’ quotation tool that will better service our insurance and reinsurance broker clients,” said Mr Nunes. “There are more than 20 reinsurers operating in the life reinsurance market in Africa,” concluded Mr Nicolas. “It is difficult for Munich Re to differentiate itself in the existing ‘simple product’ market, but equally tough for these reinsurers to compete with us.” Mr Nunes added that there is scope to expand the life insurance product offering in Africa to include cover for mortality, disability, critical illness, income protection, hospital cash and even retrenchment products.

Strong economic growth boosting life insurance sales

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