The African Insurance Organisation (AIO) has appointed Tope Smart as its new president for the next one year.
The new AIO president took over from Ms. Delphine Traore. Mr. Smart is also the 47th president of the AIO and Group Managing Director of Nem Insurance Plc, and noted that: “The Insurance sector in Africa has underperformed when compared with other sectors such as banking and telecommunication”.
Having been part of the sector for some decades, Mr. Smart has promised to increase the level of consumer trust and improve collaboration among markets, and also with governments and other regulators.
He also pledged to increase customer awareness and also the adoption of digitalisation in the insurance market.
These are the contents of Smart’s five-point agenda that will drive his one-year tenure as president of practitioners in the sector, which has lagged behind its peers in Africa.
Giving his acceptance speech, Smart disclosed his year in office will focus on five major objectives targetted at repositioning the African insurance market. He highlighted these areas as including: increased consumer awareness; adoption of digitalisation; collaboration among markets; collaboration with governments and regulators; and increased level of consumer trust.
In his acceptance speech, he made the following remarks: “I give all the glory to God Almighty for making today a reality. I am grateful to Him for this honour of leading this great organisation at a time like this. Needless to say, this is the time to focus on appropriate measures and policies that will lift up Africa’s economy – which has been badly affected due to the COVID-19 crisis.
“For the benefit of those not familiar with the African Insurance Organisation (AIO), it was established in 1972 in Mauritius as a non-governmental organisation but recognised by many African governments. It was set up particularly to develop a healthy Insurance & Reinsurance Industry in Africa.
“Among other things, the organisation aims to promote inter-African cooperation in Insurance as well as promote best practices.
“The Insurance sector in Africa has underperformed when compared with other sectors such as Banking and Telecommunication. This anomaly is an irony, given the fact that Insurance is the bedrock of any economy as it ensures the stability and optimum performance of any organisation. It therefore goes without saying that this trend must be reversed, and there is a need for all stakeholders to work in close collaboration in order to achieve this goal.
“Though the sector has moved from where it was a few years ago, there is still a lot to be done if we are to attain our rightful position in Africa.
“At this point, permit me to use this opportunity to thank the founding fathers and past presidents of AIO – particularly the immediate past president, my friend and sister Delphine Traore – for their various contributions toward growth and development of the Insurance Sector in Africa. God will reward your labour of love. I promise to build on the foundation you have laid, and by the grace of God take this organisation to the next level. It is on this basis that I hereby present my 5-point agenda for the next one year, the achievement of which will ultimately lead to an increase in the penetration rate of Africa – which is the overall objective of this agenda.
“In 2019 the Insurance penetration rate in Africa stood at 2.98%, whereas the global average penetration rate stood at 7.23%.
“Though Africa’s GDP increased from US$2.368trillion in 2018 to US$2.448trillion in 2019, total direct premium written decreased from US$69.46billion to US$68.2billion. Also in 2019, while global premium growth was 3% Africa recorded a negative growth of -3%.
“Aside from a few markets such as South Africa, Morocco, Kenya, Egypt, Malawi, Zambia and Ghana, no other market in Africa has an up to 1% penetration rate. I believe this trend must be reversed.
“At this juncture, I will now talk on the growth potentials I have highlighted above:
“From the foregoing, it is clear that Africa’s low insurance penetration is still its largest opportunity. Though the region’s Insurance sector has grown over the years, this growth is being driven primarily by economic growth rather than deepening market penetration. Steady economic growth in most countries combined with a largely underdeveloped Insurance sector have positioned the continent as the second-fastest growing region for Insurance globally after Latin America. Prior to COVID-19, the Insurance market was expected to grow at compound annual growth rates of 7% per annum between 2020 and 2025. However, the market will struggle to attain this growth rate due to the pandemic, as a lot of consumers are cutting back on discretionary expenditure (Insurance inclusive) due to dwindling income.
“Finally, let me use this opportunity to say that the African Continental Free Trade Area (AFCFTA) is a good initiative, and it is supposed to be a game changer. Among other things, markets and economies across the region will be reshaped – leading to the creation of new industries and the expansion of key sectors. Insurance markets across the region will benefit from this pact, and consequently this will increase the penetration rate,” he added.