Africa contributes 1% of the world’s $3,000bn insurance market

Musoni

Chuks Udo Okonta and agency report

Africa represents only 1 per cent of the world’s $3,000 billion insurance industry, the Finance and Economic Planning Minister of Rwanda, James Musoni, has said.

He disclosed this yesterday at the official opening of the African Insurance Organisation (AIO) in Kigali. He called on governments across Africa to support the industry to enable it takes rightful position in the world’s insurance business.

Musoni suggested to governments to put in place adequate institutional and legal frameworks to support insurance practices and products.

He also said there was need for competent regulatory bodies to be instituted to guide and promote the industry.

He told the insurers that there was need to open markets to both regional and international skills and expertise, adding that despite highly valuable efforts by AIO, the gap between Africa and the rest of the world remains huge.

 “If we look at the insurance market, Africa represents only 1 per cent of the world insurance industry, of which South Africa represents 0.8 per cent. As the world insurance market is estimated at $3,000 billion, Africa’s insurance market–outside South Africa is a meagre $6 billion,” he said.

He added that if we look at the average premium per insurance and per annum, Africa is less than $10, while the US alone is above $2,000, more than half of the insurance premiums are compulsory insurance.

Musoni said about 40 per cent of the industry’s business comes from motor vehicle premiums, life insurance, which is recognised as the most profitable, represents only 10 per cent against 60 per cent in advanced countries.

 “In the world full of uncertainties, individuals, businesses and institutions succeed by taking risks. Since many risks can be insured, the insurance industry actively supports successful endeavours, businesses, and institutions in public as well as in the private sector,” he said.

He said in Rwanda, total insurance premiums were around $18 million in 2006 that is around 0.3 per cent of the African market.