African insurers and reinsurers with a strong capital basis and already established digital distribution channels are better prepared to deal with the impact of the COVID-19 crisis.
This,according to the Africa Insurance Pulse 2/2020 theme: ‘Growth perspectives of African re-/insurance markets’ , launched today by the Africa Insurance Organisation (AIO).
The Africa Insurance Pulse 2/2020 is sponsored by Africa Re while which Faber Consulting conducted on behalf of the AIO
The Secretary-General of Africa Insurance Organisation, AIO, Mr. Jean Baptiste Ntukamazina said that insurers and reinsurers with strong capital and good digital network would fee the impact of the pendamic
“The COVID-19 pandemic has caught the global insurance industry largely unprepared. Those African insurance and reinsurance companies with a strong capital base, and the ability to distribute their products digitally were better equipped to weather the impact of the pandemic.
Ntukamazina said the capital and the digitalisation of business will enable them to capitalise faster on the business opportunities arising after the crisis.
“The combination of both factors protected them against the worst effects of the crisis and enabled them to maintain their client relations even during lockdown periods or in a social-distancing environment”.
“As these insurers strengthened their market position during the pandemic, they will be even stronger in capturing those business opportunities, rising in the future”.
Group Managing Director and Chief Executive Officer of Africa Reinsurance Corporation, Dr. Corneille Karekezi said that insurance regulation in Africa has significantly improved in recent years in the way they regulate companies.
“Various regulators have pushed ahead, mandating the implementation of risk-based capital schemes or capital increases, as well as improved operations and risk management. At the same time, we witness rising protectionist efforts to retain insurance and reinsurance premiums locally.”
Karekezi, however, advised regulators to assure that in particular in times of economic distress, insurers have access to the highly-rated risk capacity and expertise that well-diversified reinsurer provides.
“Indeed, some recent catastrophes, including large natural catastrophes or man-made claims in South Africa, Cameroon and Lebanon, and in addition to the threat presented by COVID-19 potentially related claims remind us that some exposures can quickly exceed local capacity.
Executives expect an improved risk awareness among consumers, leading to higher demand for insurance products. However, executives are concerned about the impact of COVID-19 on the income of African households.
Partner at Faber Consulting, Mr. Andreas Bollmann who also spoke said Africa’s insurers and reinsurers remain confident of the fundamental growth potential of their market.
“They believe that the effects of the pandemic will be offset by an accelerated digital transformation, supportive government and regulatory policies, and increased risk awareness by consumers.”
For the remaining part of the year, 2020 and the new 2021, Africa’s insurance executives expect a continuation of the high level of uncertainty. insurers and reinsurers have to maintain adequate solvency, ensure operational resilience and remain responsive to customer needs.
“In 2020 insurers introduced large-scale transformative investments to redefine their core value proposition, optimise operations, update technology and to build a workforce for the future. In 2021 they have to continue on this path of strengthening their competitiveness and thus contributing to a more robust marketplace”