The federal government has charged insurance companies on African continent to leverage on the African Continental Free Trade Area (AfCFTA) to deepen insurance penetration.
The vice president, Professor Yemi Osinbajo spoke at the closing ceremony of the 2021 Conference of African Insurance Organisation (AIO) and investiture of the managing director/CEO of NEM Insurance Plc, Mr. Tope Smart as the new AIO president in Lagos on Wednesday,
Vice president Osinbajo urged African insurers to leverage opportunities in the AfCFTA, adding that, “every smart economic grouping, whether governments or businesses, must be thinking, planning and strategizing for these new times.”
“The free trade agreement presents a major opportunity for African countries. By some estimates, if we get it right, we can bring several millions out of extreme poverty and raise the incomes of 68 million others who live on less than $5.50 per day. There are potential income gains of up to $450 billion, and just cutting red tape and simplifying customs procedures alone could drive up to $250 billion of that sum,” he pointed out.
To him, “so, what does all this mean for the insurance industry in Africa? Well, plenty of opportunities. More trade in goods will mean greater need for insurance services, brokers, in particular, should expect a boom; demand for trade facilitation services will rise, but obviously companies that already have market presence in other African countries, even if by collaboration, will benefit more than others.”
While expecting to see more well capitalised insurance providers from other African countries coming to compete in the Nigerian market, he added that, “services can be set up faster than manufacturing plants. Nigerian financial services companies, especially banks, are already in many African Countries, the likes of Zenith, Access, UBA. How about Insurance companies? We should now be looking at developing homegrown international African insurance conglomerates. The time is now.”
Stating that there will obviously be opportunities for new insurance products and solutions, especially, in the property and casualty segment of the business, he said, insurance companies must also be prepared for the systemic nature of climate induced damage, with the possibilities of market failures and more system-wide destabilisation.
“Here in Nigeria, the growing intensity of flooding and damage to vast agricultural acreages might have a knock-on effect on other areas of the economy. Further slumps in the economy are bad for everyone, even insurers,” he noted.
Similarly, the new president, AIO, Mr. Tope Smart, unveiled a five-point agenda that will serve as a guide during his one-year tenure.
In his acceptance speech, he said, said his administration will be anchored on five key areas namely: increased awareness; adoption of digitalisation; collaboration with other markets; collaboration with government and regulators and building customers’ trust.
Noting that the insurance industry in Africa has underperformed compared to other sectors such as banking, telecommunication, and promised to reverse the trend, he expressed disappointment over the low performance of the African insurance market. Aside from South Africa, Morocco, Kenya, Egypt, Malawi, Zambia and Ghana, he said, no other African country has been able to grow penetration to one per cent, promising that, things will change positively during his tenure