The future of insurance in Africa: how insurers can regenerate their business model

Johannesburg - Presently, the insurance industry stands at a pivotal juncture marked by prominent shifts in the environmental, economic, societal, and technological landscapes.

These transformations highlight both challenges and opportunities that demand careful consideration and a strategic response. To adapt to the current circumstances and secure the longevity of their businesses, insurers must move beyond being resilient to being disruptive.

Jo-Ann Pohl, Associate Director for Kearney, says: “The creation of lasting value through the reimagination of strategic and operating fundamentals, alongside the vision of “a future that works for everyone” through active commitment to society and the natural world is required— a concept we refer to as regeneration.”

Kearney’s report “The State of Africa’s Insurance Industry 2024”, explores the multifaceted influences on the insurance value chain, emphasising the immediate need for a regenerative mindset and strategy that normalises ongoing, systemic changes.

With a dedicated focus on Africa, the report underscores the significance of four pivotal trends driving transformation in the insurance landscape: environmental factors, political and economic dynamics, societal shifts, and technological advancements.

The race towards climate change adaptation and the uncertainty surrounding the trajectory of clean energy adoption exert significant environmental pressures on insurers, who must simultaneously strive to maintain competitiveness and resilience to disruptions while navigating a shifting risk landscape. A key challenge in this regard lies in securing the technical balance in underwriting.

From a political standpoint, a multitude of economic crises have exacerbated global poverty and inequality in recent years, with escalating inflation and interest rates posing substantial challenges for insurers.

Nonetheless, Africa is anticipated to experience the second-highest growth rate among major global regions in 2024. Consequently, capitalising on this growth and sustaining profitability emerges as a primary focus for insurance entities.

With Africa boasting the youngest population globally, the region stands poised for substantial expansion provided it can cultivate a robust, resilient economy that acknowledges the imperative of promoting sustainability.

In addition to facing growing pressure from the international community regarding sustainability, the steady increase in intra-African migration and immigration escalates the demand for new types of insurance.

With Africa’s insurance sector primarily being fuelled by economic expansion rather than a significant increase in market penetration, the need for practical action to drive regenerative transformation is evident.

The advent of transformative technologies such as self-driving vehicles, artificial intelligence, quantum computing, genetic manipulation, and digital currencies engenders profound implications for insurers' commercial and operational frameworks, fundamentally altering their modus operandi and business strategies.

“Regenerate is the answer to “what’s next” in a post-resilience world. Optimising got many companies where they are today, but regenerating will move them forward. With a focus not limited to resilience but anchored in regeneration, adaptability, and the ability to act as ecosystem orchestrators, insurers are encouraged to embrace these golden rules as they navigate the uncertainties of the next decade and beyond”, says Pohl.

The report offers a thought-provoking analysis of the current African insurance market, addressing both challenges and opportunities. It yields actionable insights and a strategic framework aimed at enabling insurers to not only survive but thrive in this era of profound transformation.