“Africa is a big opportunity for insurers, and they have all identified this. All of the South African insurers we’ve put in our publication stated their ambitions for Africa, so there is a big drive by them. The opportunities are there from the low penetration, as well as the population demographics,” John Kruger, senior manager at Deloitte & Touche, told CNBC Africa.
“Africa has a very young base, and that’s going to translate into a good working class population, which increases consumer spending, which then increases the available spend for insurance products.”
The insurance sector in various parts of the continent remains the least penetrated industry in the continent, and South African insurance companies such as Sanlam have already made moves into those spaces.
(READ MORE: Sanlam taps into Nigeria's insurance market)
“The fact remains that South Africa is at an opportune moment because of our membership of the G20 – we are the only African member on the G20 since December 2010 – [and] we are an official member of BRICS," said Suzette Strydom, general manager of legal at the South African Insurance Association.
“What’s quite interesting is if we understand exactly why the legislation is so challenging and the role that South Africa plays, it sort of places us at a different opportunity level.”
Strydom added that the fact that the South African insurance system is a stable and well-regulated market creates investment opportunities in the country and on the continent. South Africa can also be used as a gateway into other African countries.
(READ MORE: Africa's untapped insurance market a vast opporunity for firms)
However, according to Kruger, the country’s insurance system has a number of challenges that companies have attempted to keep in check.
“All of the companies which are included in our report identified legislation as a key issue which they face. The two key things which we identified were protection of the industry, which is the fallout from the global financial crisis, and protection of consumers in terms of protection of personal information, as well as treating customers fairly,” he explained.
There is nevertheless a danger in placing significant focus on managing and eliminating risk, as some risk is necessary for reward.
“There’s a lot of debate about protecting the users of these financial products, and that one should be very cautious not to protect the consumers right out of the market in this stable and well-regulated environment,” said Strydom.
“That is why the robust and meaningful consultation with the policy makers remains imperative from a South African insurance association point of view.”