Kigali, 12 February 2018
President Kagame today addressed the 42nd General Assembly of the Federation of African National Insurance Companies (FANAF), which is taking place in Kigali for the third time.
Held under the theme “The African Insurance facing Disruptions,” the three-day conference brings together more than 800 eminent personalities, insurers, reinsurers, experts and other stakeholders in the sector from Africa and beyond, to discuss key challenges and opportunities in the African insurance sector.
In his address, President Kagame stated that services, according to the World Bank, are the fastest-growing segment of the global economy, already accounting for 70 per cent of output, and 60 per cent of employment.
“Insurance services are an important part of that picture. But insurance does much more than compensate for misfortune. The more advanced an economy, the greater the size, diversity, and efficiency of its insurance market. Indeed, it is fair to say that insurance underpins prosperity and innovation. Insurance products allow investors and entrepreneurs to take risks. In the United States around one-third of corporate debt is financed by insurers. Insurance also facilitates the growth of trust over long distances. Without it, cross-border trade would grind to a halt.”
President Kagame pointed out that insurance is critical for the structural transformation of African economies.
“Moreover, by giving a price to various forms of risk, insurance helps us to detect hidden danger and plan accordingly. This means fewer deaths in fires and floods, safer roads and buildings, and less crime.”
Calling for African insurance stakeholders to work towards improving the insurance sector in Africa, President Kagame said the situation was not impressive.
“One out of every six people on the planet is an African, nearly 17 per cent of the population. Yet Africa generates only 1.5 per cent of global insurance contracts, around 75 billion dollars, as of a few years ago. Around three-quarters of that, comes from South Africa. The rest of the continent combined, accounts for less than one-half of one percent of the world market. I think this has to change and you are the ones to change it.”
However, President Kagame said there was hope for the future of African insurance, considering the prevailing trends.
“So, we have a long way to go. But there are two pieces of good news. First, while these statistics may be unattractive, there is clearly a huge opportunity for future growth particularly as Africa’s middle class expands, and expands faster than anywhere else. Africa’s national insurance companies, represented by all of you here, will be the drivers of that expansion as well as the natural partners for international firms looking to enter our market.”
Some of the key challenges faced by the insurance sector in Africa include; low levels of ICT and other innovative initiatives, limited financial education and insurance awareness, lack of suitable and appropriate products for different market segments, cut throat competition and under-pricing among others.