Strong underwriting, financials key drivers for growth sustainability

As African insurance market including Nigeria continue to witness growing interest of other international players for investment over rising growth potentials, issues of strong underwriting and sound financials are critical, experts have said.

“Consequently, this is also driving increasing interest of local insurers for international financial strength ratings, with the need for insurers and re-insurers to demonstrate solid underwriting and overall sound financials as a key aspect of the sector’s development.”

Therefore, benchmarking a company’s financial strength against competitors in other international domiciles is increasingly an aspect of this continent’s insurance development, in the same way as it has become a feature of other global insurance markets, AM Best stated in a recent report on insurance sector.

AM Best reports on the continent’s insurance sector said penetration in Africa is growing, but from a very low base. “In certain countries, Africa’s insurance and reinsurance markets offer potentials for growth, given the economic development in the region. Each country has different drivers for heightened insurance demand, ranging from economies dominated by the oil and gas and mining industries, to large populations.” According to the report, insurance market growth in recent years has also been characterised by an increase in the number of direct partnerships between businesses in Africa with others internationally.

However a recent international conference on insurance held in Istanbul, Turkey had stated that both saturated and unsaturated markets are still targeting increase in premium volume throughout the world. This is only possible with increasing awareness or marketing skills, in addition to traditional methods, as new distribution channels are also being developed. “Bancassurance, web-based and telemarketing are developing as alternative channels with aggressive targets, whereas the importance of agencies and brokers for risk and client management is growing.”

By: Modestus Anaesoronye