Promising outlook for bancassurance in sub-Saharan Africa

Strong economic growth, rapid development of the banking and insurance sectors and an increasingly beneficial regulatory environment have all contributed a positive outlook for bancassurance in sub-Saharan Africa, according to Finaccord.

Banks in ten African countries in sub-Saharan Africa, namely Angola, Côte d'Ivoire, Ghana, Kenya, Mozambique, Nigeria, South Africa, Tanzania, Uganda and Zambia, are well-positioned to grow as an insurance distribution channel from the rapid increase in the value of the insurance markets.

Banks have not only significantly increased the size of their branch networks and number of deposit accounts in recent years but also “increasingly appreciate the value of bancassurance as a future revenue generator”.

These are key findings from a report published by Finaccord titled Bancassurance in Sub-Saharan Africa: Current State and Future Perspectives to 2020.

Finaccord’s research established that, across the top ten banks by number of retail banking customers in each of the ten countries investigated (a survey of 100 banks in total), 89 already sell insurance in one form or another and 41 promote policies that can be bought on a stand-alone basis.

While the South African bancassurance market is by far the most sophisticated and mature in the region, other countries such as Côte d'Ivoire, Kenya and Mozambique are beginning to follow suit.

"Macro-economic growth and the development of banking and insurance sectors across much of sub-Saharan Africa has been very impressive in recent years", commented Tobias Schneider, a consultant at Finaccord.

"For example, across the ten countries researched, the number of deposit accounts at banks rose more than four-fold from around 29.7 million in 2005 to 133.2 million in 2013.”

“Moreover, regulatory authorities in the region have begun to acknowledge the potential value of bancassurance for the further development and diversification of the financial services industry.”

As a result, banks already a growing distribution channel for selling insurance and are set to become even more prominent in future.

A key factor driving the development of bancassurance in the region is the presence of international and regional banking and insurance groups (often originating from South Africa) that have begun to use their experience in this field in sub-Saharan Africa.

Although not an exhaustive list, these include groups such as BancABC, Bank of Africa Group, Barclays, Ecobank, Standard Bank Group, Standard Chartered and Zenith Bank among banks, and AIG, Hollard, Jubilee Insurance, Kenyan Alliance, MMI Holdings, Old Mutual and Sanlam, among insurers.

Author: Stephen Durham