growth of the African insurance market
Africa is currently the second fastest growing insurance market in the world, behind Latin America. The African insurance market was expected to grow at 7 percent per year from 2020-2025. Even though the Covid-19 pandemic has delayed the onset, the growth pattern remains unaltered as was reported in June 2022 by Research and Markets in their report: ‘Africa Insurance Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027’. Their most recent figures indicate that the African insurance market is estimated to grow from US$ 75.3 billion in 2021 to US$ 115.9 billion by 2027, exhibiting a CAGR of 7.45% during 2021-2027.
Factors Assisting Insurers in Africa
Two major factors assist insurers to grow their stake in Africa:
- Increased literacy and wealth levels are creating a whole new middle class across the continent, adding to the pool of insurable assets and lives.
- Africa now has an ever-increasing access to mobile devices, making it possible for insurers to interact with them directly.
Importance of Digital Transformation
As with the rest of the world, digital transformation (DX) within and across companies in Africa is vital to transform them from being inward-looking, to focus on customers, their changing behaviours and their new needs. Instant gratification rules the world markets on every front. People want whatever they purchase to be specific, tailormade and available with the click of a button.
Instant Gratification and the Importance of Customer Focus
An article in The Daily Maverick described how Shoprite has done exactly that through their ShopriteX team who developed the Xtra Savings rewards program and the Sixty60 delivery platform. In two and a half years Shoprite and Checkers combined, have signed up 25 million users which has rendered them a 75% share in the online grocery market in South Africa. Not bad if you consider that they are the youngest in the grocery rewards programme game! It all started with a fresh mindset to get the right people collecting the right data to design the right tools.
Insurers also need to have a strategy and the tools to find out what their customers want and then design the specific buttons they would like to click. It is estimated that, by 2025, some 20 billion devices will be connected. Such devices have already churned out over 90 percent of data ever produced! Insurers need to tap into this superhighway of data. Mining and analysing this data will allow insurers to price the risk associated with a customer automatically and more accurately. This creates an opportunity to offer direct, pay-as-you-go coverage to your customer.
Mining Data for More Accurate Risk Pricing
Data collected from 1000 companies around the world confirmed that digital leaders in every industry outperform their competition. Revenues at digital leaders grew more than twice as fast and they were nearly twice as likely to increase profit than companies that lagged in digital transformation. And that was three yearsbefore Covid-19 hit the fast forward button on everything digital! It is time for the Insurance Industry to capitalise on the low hanging fruit that the African market presents.
In this series of articles, we want to take you on a journey to change the business thinking around digital transformation. We will unpack why companies sometimes struggle to accomplish their digital transformation goals and suggest ways to improve the success rate of their digital transformation efforts. With the right approach, digital transformation can deliver what it was designed to do: generate value for the business.
If you’re interested in learning more about digital transformation in the insurance industry or want to explore how Greenraven Ventures can help your business, please contact us at hello@greenraven.co.za or connect with us on LinkedIn.
