What will unlock the next wave of growth in Africa's insurance penetration?

Africa's insurance penetration remains below 3 per cent, highlighting a vast untapped potential in the sector. In a recent interview with CNBC Africa, John Gangla, Associate General Manager at Minet Kenya, shared insights on the key factors that will unlock the next wave of growth in insurance penetration across the continent. Gangla emphasized that technology, regulation, and financial innovation are crucial drivers that will propel the insurance industry to new heights. The adoption of technology has revolutionized the distribution models of insurance products in Africa. Traditionally, salespeople would physically move from one location to another to sell insurance. However, with the high mobile phone penetration in the region, insurers are leveraging technology to make insurance products more accessible. In countries like Kenya, consumers can now purchase motor insurance online and receive their certificates instantly, streamlining the process and eliminating the need for in-person interactions. Moreover, the regulatory framework plays a vital role in ensuring the stability and growth of the insurance sector. Gangla highlighted the importance of stringent regulations, such as liquidity requirements, to safeguard the operations of insurance companies. By imposing minimum standards, regulators can prevent issues like insolvency that plagued the industry in the past, ultimately fostering a more sustainable environment for insurance providers. Financial innovation has also emerged as a key enabler of insurance penetration in Africa. Insurers are continuously developing new products tailored to address specific needs in various sectors. For example, the agriculture industry, which is vulnerable to weather fluctuations and climate change, has seen the introduction of innovative insurance products. In regions like northern eastern Kenya, where drought is prevalent, insurers utilize satellite imagery to assess conditions and trigger payouts based on predetermined criteria, enhancing efficiency and reducing reliance on manual assessments. Gangla further addressed the importance of inclusive insurance products with a low premium-high volume strategy. By focusing on financial inclusivity, insurers aim to cater to the vast majority of the population that has been historically excluded from traditional financing channels. Through micro-insurance offerings designed for small and medium enterprises (SMEs) and informal sector workers, insurers are expanding their reach and bridging the gap in coverage. While low premiums may yield modest returns initially, the potential for growth remains significant due to the large market of underserved individuals. The interview also touched on emerging innovations in the insurance space, including the development of mental health products to address a growing need for comprehensive healthcare coverage. Gangla's insights shed light on the evolving landscape of insurance in Africa and the promising opportunities that lie ahead for insurers and consumers alike.