By Ebere Nwoji
Vice President Yemi Osinbanjo has said that there are plenty opportunities for insurance sector practitioners across Africa, especially insurance brokers and other finance service providers in the African Continental Free Trade Area (AfCFTA) .
Osinbanjo, who spoke at the closing dinner of the just concluded 47th African Insurance Organisation (AIO) conference and General Assembly in Lagos said these opportunities could engender socio-economic transformation of the African continent.
He therefore urged African insurance operators to take advantage of these opportunities to grow the regional economy.
“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”, he stated.
The Vice President, however warned Nigerian insurers in particular that to tap from these opportunities there was expectation for fresh recapitalisation adding that they will see more well capitalised insurance providers from other African countries coming to compete in the Nigerian market.
According to him, Nigerian insurers should not be surprised if this happens quickly.
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“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,” the Vice president said.
He further challenged the regional insurers to get prepared to handle risks emanating from climatic change.
“It was quite eye opening. While there will obviously be opportunities for new insurance products and solutions, especially in the property and casualty segment of the business, 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 is bad for everyone, even insurers”, he said.
According to him, for Africa, there is perhaps a more significant challenge, noting that in the past two years, the wealthier countries, after building their own economies on fossil fuels, are now banning or restricting public investments in fossil fuels, including gas.
He pointed out that seven European countries, including France, Germany, and the United Kingdom, have announced that they would halt public funding for certain fossil fuel projects abroad.
“Also, the World Bank and other multilateral development banks are being urged by some shareholders to do the same. The African Development Bank, for instance, is increasingly unable to support large natural gas projects. Already, some OECD based insurance companies are already committing to reducing their commitments to carbon intensive industries by 2030.”
This being the case, he said African insurance companies must now speak and act differently.
“You must be at the forefront of the campaign for a just and equitable transition to a low carbon future. This means that we cannot accept a defunding of gas projects when gas is an important transition fuel for us. Not just to get our people from the environmentally damaging firewood to cooking gas, and also autogas for our auto vehicles, but to also provide much needed power for industries and domestic us
In his acceptance speech at the dinner, new president of AIO, Mr Tope Smart, said his one-year administration would anchor on five key areas namely: increased awareness; adoption of digitalisation; collaboration with other markets; collaboration with government and regulators and building customers trust.
Smart who is also the Group Managing Director, NEM Insurance Plc and immediate past Chairman, Nigerian Insurers Association(NIA), noted that the insurance industry in Africa had underperformed compared to other sectors such as banking, telecommunication, and promised to reverse the trend.
He expressed his dissatisfaction with the low performance of the African insurance market, adding that aside South Africa, Morocco, Kenya, Egypt, Malawi, Zambia and Ghana, no other African country has been able to grow insurance penetration to one per cent.
He called on AIO members to work hard to ensure the reversal of the trend.
He said for the African insurance market to take its rightful place, the issues of awareness, digital adoption, collaboration with other markets; collaboration with government and regulators and building customers trust are critical to the growth of the market and must be taken seriously by all players.
