Nigeria, Ghana and other regional insurance markets lose N2.89 trillion ($8billion) yearly to offshore insurance markets, mainly in Europe and America, due to fragmented nature of African insurance markets.
The fragmented markets has resulted to the inability of the insurance companies across the continent to handle big ticket businesses within the region.
The President of the Republic of Ghana, Nana Addo Dankwa Akufo-Addo, made the disclosure at the recently concluded 45th African Insurance Organisation conference and yearly General Assembly holding in Accra, Ghana.
Akufo-Addo, who was represented by the Senior Finance Minister, Yaw Osafo-Marfo, noted that whereas in developed world's markets, insurance firms operate on large scale basis, in Africa, there are numerous small size insurance firms with low capacity and inability to underwrite huge and profitable businesses, which are most times flown to America and European markets.
"If you go behind all banks in Europe, find out who owns them. If you do the analysis, most of them are owned by insurance companies.
"The insurance sector in Africa must play and continue to play a major role in national development. The creation of jobs, contribution to the economic growth of your respective countries, funds you mobilise are contributing to the development of your countries," he advised.
According to him, Africa's growth and development is not possible without the transformation of the various sectors of the economy.
"The insurance sector must therefore, undergo some changes as its contribution to Africa's economic transformation is of paramount importance," he said.
He regretted that despite the critical role played by the insurance sector in the growth and development of economy of other continents, in Africa, only three countries have double-digits in the sector's contribution to their Gross Domestic Product (GDP).
"The insurance industry penetration rate as a measure of GDP in most of our countries remains at single digit. Only three countries are in double digits.
"The percentage rate of insurance as a percentage of GDP is about 3.2 per cent in Kenya, 7.5 per cent in Namibia, 14.5 per cent in South Africa and in Ghana, it is less than two per cent and in Nigeria, less than one per cent," he said.
He challenged countries in the region whose contribution was still within single digit margin to rise to the challenge of contributing meaningfully to their national GDP adding that this will be possible if the operators will cooperate in risk sharing and technological transfer as well as in customer service improvement.
He also charged operators of various sectors of the regional economy to ensure that local insurance market's needs are satisfied before their excess businesses are taken abroad.
"The potential of African insurance market is worth more than the 2017 figure of $64 billion. Our vision and commitment must be to build an industry that is worth more than this figure.
"The sector has to graduate to a level where its contribution to GDP is in double digits. That is when our catalystic role as a source of medium to long term will be felt. The low penetration rate points to opportunity.
"We must not only think of what we can do for our individual companies, we must think of what we can do together as a continent. I see opportunity to create prosperity of our people through the insurance industry", Akufo-Addo stated.
He said to harness this opportunity, there was need to increase inter-African corporation in insurance, noting that regional operators must come together,work together insure together finance together and share the risks together.
According to him, it is only when the operators go that way that their business activities will have the necessary effect on the continent.
Still kicking against the existence of small size insurance firms in the continent, he said: "Individual companies are too small to shoulder the risk obtainable in the region, therefore at the end of the day, you have array of most of the business taken to overseas. Ghana insurance industry for instance can only absorb three percent of oil and gas risk the rest is taken overseas."