Africa needs to upscale her efforts in deepening insurance appreciation and penetration because the continent has not yet adequately tapped into what the industry offers in accelerating economic growth, an expert has said.
Mike Whitwell, AIG Insurance's regional president for Central Region which comprises Africa, Middle East, Russia, India and South Asia, remarked that though insurance business was taking a firm ground in Africa, the continent still suffers from low levels on insurance penetration.
"The sustainable development that all countries aspire to achieve would be adequately attained only if investments have a fall-back position in the face of unpredictable losses which is the cardinal purpose of insurance as it cushions enterprises against demise," he said.
Speaking during a stakeholders' luncheon he hosted at Serena Hotel recently, Whitwell also pointed out that developed economies are adequately taking advantage of the insurance's contribution to all sectors of economies adding that there is no better time for Africa to do the same than now.
The average global penetration rate for the insurance market is at 7.5%, with England as the global leader at 16.5% and South Africa leads the continent with 16% penetration rate.
However, insurance penetration in East Africa for example stands at just below 3% of the countries' total Gross Domestic Product with Uganda trailing at a mere 0.65% as of 2011 industry performance report. Rwanda's rate is at 2.3% and Kenya doing slightly better with a penetration rate of 2.76% while Tanzania is at 2.2%.
Despite the low penetration rates, Whitwell added that the continent had contributed significantly to the insurance industry growth, yet there is a huge potential for further growth.
"We appreciate the support we get from Africa and Uganda in particular. This support will serve as a benchmark for us as we seek to consolidate our foot print on this continent because we believe Africa is an exciting market for us, and we are sure that our partnership with the local industry players will push the country to greater heights" he said.
AIG managing director Alex Wanjohi revealed the company registered premium income worth sh41b in 2011 against an industry record claims payout of sh35b in 2011
Speaking to the media recently, the Insurance Regulatory Authority (IRA) executive director Hajji Kaddunabbi Lubega pointed out that growing Uganda's insurance industry requires players to widen the spectrum of their focus by tailoring products suiting the Small and Medium Entreprises under micro-insurance arrangements.
Experts are optimistic that Uganda's insurance industry's ray of hope also lies in the soon- to- be operational Uganda-Re-Insurance, a national company where individuals firm will insure higher risks that individual firms may find hard to offset in claim settlement arrangements.
The absence of a national re-insurance company in Uganda forces local firms to re-insure with foreign companies, this undertaking makes Uganda lose 40% of the total premiums collected. According to the industry performance report by IRA, premiums rose to sh294.44 b in 2011 compared to sh239.99 b recorded in 2010.
According to Whitwell, AIG contribution towards the development of the local insurance industry remains enshrined in the deep commitment to existing clients and new business relationships as the company moves to re-brand back to the former name, the American International Group (AIG).