We live in a world of surprises, uncertainty, and risks. One day you have everything in order and the next day, it seems like the world is falling apart.
Families, businesses, individuals, and properties are continually exposed to different types of risk. This risk includes loss of businesses, properties, poor health, life, etc.
Although the chances of preventing this risk from occurring are almost impossible, globalization has led to the development of insurance companies in Africa. The insurance companies in Africa have been able to develop products that can protect businesses and individuals from such losses by compensating them with financial resources.
Risks are bound to happen, and this is where insurance companies in Africa play a vital role in society.
What is insurance?
According to Investopedia, insurance is a contract represented by a policy in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
In simpler terms, one can say insurance is a financial product that reduces the cost of a loss or the effect of loss when a risk goes wrong.
Insurance in Africa
The African insurance market is currently the second fastest growing insurance market in the world and the insurance companies in Africa currently hold a value of about $68 billion in the African insurance market.
Although the insurance companies in Africa are quite fragmented, about 90% of the insurance premiums are concentrated in 10 countries, with South Africa holding the largest market premium, followed by North Africa.
Insurance companies’ performances in Africa
Penetrating the North African insurance market has been quite difficult for insurance companies.
So far, Morocco seems to be home to the few insurance companies in Africa with a positive outlook on the African insurance market.
In West Africa, non-life insurance is the most common type of insurance among insurance companies in Africa and it comprises almost 70% of the entire market in the respective regions.
Anglophone West Africa has an extremely low insurance penetration rate of 0.3%, compared to 1.2% in Francophone Africa, according to McKinsey data.
With the size of Nigeria and Ghana’s economies, these two West African countries seem to have quite a lot of insurance companies in Africa and they are doing well in the African insurance market.
South Africa is inarguably the most advanced and developed market in the African insurance sector.
A life insurance policy is seen as the most common insurance product in South Africa with a gross premium amount of $48.3bn, which accounts for over 70% of the entire African insurance market.
Also, the innovative use of technology has formed the basis of the South African insurance market and this has gotten a good response from South Africans as they admit that digitization of the insurance process cuts down costs and offers a more stress-free experience for them.
South African Insurtech start-up Naked is one of the leading African innovators in the insurance space. Since penetrating the market in 2018, the digital-only insurance platform has continued to offer coverage for homes, vehicles, and individual items. Unlike its competitors, Naked has been able to create a name for itself by the use of AI and automation to reduce costs and improve the overall user experience.
In East Africa, Kenya’s insurance market is one of the most dominant with the sector experiencing growth since 2013. Despite the growth, insurers have experienced declining returns on their equity due to a mix of tight margins and insurance fraud.
However, East Africa is slowly becoming the most active fintech hub on the continent, after South Africa of course.
How does insurance work?
Insurance companies collect small amounts of money from clients may be monthly, quarterly, or yearly depending on how you want it, they put the money together and pay for a loss when you have one.
For instance, if your property is stolen, lost, damaged, or destroyed, and you have a general insurance policy that covers the property for unforeseen risks, you can make a claim and draw on your pool of money to help pay for repairs or replacement costs.
This gives you the privilege of not paying the full cost of replacing or repairing valuable items when stolen, lost, or damaged.
However, it is also possible that a person who pays an insurance premium for years might never make a claim.
Insurance is divided into two major categories:
– Property and Casualty insurance (P&C)
– Life and Health insurance
Property and casualty insurance provides protection to businesses and individuals for losses related to their belongings or assets, both physical and financial.
Life and health insurance protect people from financial loss that is caused by sickness or premature death.
Related article: Investing in Africa: How to start a Business in Ghana
The top 10 insurance companies in Africa
Here are the top 10 insurance companies in Africa that seem to be doing so well in the African insurance market (in no particular order)
1. Old Mutual (South Africa)
Old Mutual Limited (OML) is a premium African financial services group that offers a wide range of financial solutions to retail and corporate customers across key markets.
2. Wafa Assurance (Morocco)
Wafa Assurance is the insurance brand of the Moroccan bank, Attijariwafa Bank, with its headquarters in Casablanca. Wafa Assurance offers insurance services for cars, homes, health, and lots more.
3. Discovery Health (South Africa)
Discovery Health is a shared value insurance company that mainly serves small to large-sized employers, as well as individual clients. They also operate in the UK, US, and Chinese markets.
4. Liberty Holdings (South Africa)
Liberty Holdings Limited (LHL) is a JSE-listed financial services group and is part of the Standard Bank Group. Liberty Group offers an extensive, market-leading range of products and services to help its clients build and protect their wealth and lifestyle.
Their financial services are primarily undertaken in South Africa, with various levels of services being provided in other African countries.
5. Momentum Metropolitan Life Assurers (South Africa)
Momentum Metropolitan Holdings Limited (Momentum Metropolitan) is a South African-based financial services group listed on the Johannesburg Stock Exchange in South Africa and on the Namibian Stock Exchange in Namibia.
Momentum Metropolitan assists businesses and people from different walks of life to achieve their financial goals and life aspirations by helping them grow their savings, invest, and protect their lives, properties, and assets.
6. Royale Marocaine d’Assurance (RMA) – Morocco
RMA was the first Moroccan company to operate in the insurance market dominated by foreign companies at the time. RMA is known as a major player in the Moroccan insurance industry.
7. Saham Assurance – Morocco
SAHAM Assurance, formerly CNIA Saada Assurance SA is a Morocco-based company engaged in the provision of life and non-life insurance products and services. It offers a range of solutions for young and elderly clients, students, professionals, and businesses.
Their services include auto insurance, risk, marine, health insurance, life insurance, pension funding, fire insurance, driver and passenger protection, vehicle damage insurance, natural disaster insurance, etc.
8. Misr Insurance Company – Egypt
Misr Insurance Company (Misr Insurance) is a state-owned insurer with a large operating scale and a leading business franchise in the Egyptian insurance sector. It is recognized as one of the most successful insurance companies in Egypt.
9. The Hollard Life Assurance – South Africa
Hollard Life Assurance is known as South Africa’s largest privately-owned insurance group. The Hollard Insurance Group includes The Hollard Insurance Company and Hollard Life Assurance Company.
The insurance company provides short-term and life insurance as well as investment products to individual consumers, commercial entities, and corporate clients.
One of the insurance’s sole purposes is to enable people to create and secure a better future.
10. Bryte Insurance Company – South Africa
Bryte Insurance Company Limited is another thriving insurance company in South Africa.
They partner with customers and brokers to protect their businesses and improve their risk profile across the continent.
The insurance company currently operates in South Africa and Botswana, and they provide property and casualty insurance, reinsurance, and investment management.
In conclusion, apart from insurance companies protecting individuals and businesses from different kinds of potential risks, the insurance sector also plays a significant role in the economic growth of a country by providing stability to the functioning of businesses and generating employment for millions of people.