The evolution of insurance in emerging African and Middle Eastern countries

Africa

The most significant growth is reported in sub-Saharan Africa. Angola, Nigeria, Namibia, Kenya and South Africa are among the countries that have experienced the most significant increases.

Evolution of premiums: 2002-2011

Angola, rapid expansion

It is since 2001 that the Angolan insurance has been on a sustained growth pace. With 675% of growth rate between 2002 and 2011, the market reported the highest global premiums increase.

The economic recovery from decades of civil war, the enactment of a legal framework regulating the sector and the improved purchasing power helped to boost the insurance market.

Nigeria, a new life

With 170 million people, Nigeria is the largest market of West Africa. Endowed with an oil industry, mining resources and major infrastructure projects, the Nigerian insurance business has managed to pick up momentum. In addition, a series of reforms enabled the authorities to restructure, clean up and strengthen the capacities of local companies.

Between 2002 and 2011, the market turnover had grown by 301%, the largest growth in Africa, after Angola.

Growth prospects are promising. According to the NAICOM, the market regulator, the premium volume would reach 6.2 billion USD in the next four years. Insurance share in GDP would increase from 1% in 2013 to 3% in 2017.

Namibia, a well-regulated market

Namibia has one of the best regulated markets in Sub-Saharan Africa. With 17 insurers and one reinsurer, the industry went through a period of stagnation between 2006 and 2008 before renewing as from 2009 with an excellent performance and a growth rate of 21.5%.

Kenya, best penetration rate

Kenya is the main insurance center of East Africa. According to A.M. Best, the continent’s best penetration rate (3.2%) is reported in Kenya, second to South Africa, a rate comparable to that achieved in Brazil and China.

South Africa, leader of the African insurance

While other emerging markets of Africa were steadily growing at a high rate, South Africa was faced with a decline of its premium income in 2008. The market recovered well in 2009 with over a 10% growth. Ever since the South African insurance has embarked on a steady rise.

With 52.4 billion USD of premiums in 2011, South Africa alone accounts for 77% of the continent’s contributions.

South Africa has the third largest penetration rate in the world (12.9%), preceded by Taiwan and Netherlands.

The Maghreb

The insurance markets in the Maghreb have enjoyed a steady growth in the recent years. This is particularly true for Algeria and Morocco.

Algeria, untapped market

Algeria is endowed with enormous potential. Insurance is driven by the motor class of business and by state owned companies. In 10 years, the market has grown by 229.9%. The highest growth of turnover, 35.43%, was reported between 2007 and 2008. After a slight slowdown in 2009 and 2010, growth has gone upward in 2011.

Morocco, a mature market

First market in the Maghreb and second on the African continent, Morocco has reported a premium increase of 161% over the 2002-2011 decade. This growth did, however, slow down between 2008 and 2010 due to decreasing life sales. The market bounced back in 2011 with a premium increase of 9.2%.

The prospects of the sector, one of the most dynamic of the Moroccan economy, remains promising for the years to come. The market should take full advantage of the implementation of the 2011-2015 program contract and of the introduction of new compulsory insurance covers. Companies’ growth outside the Moroccan borders would also have a beneficial effect on the turnover of local insurers.

Evolution of premiums in the Maghreb: 2002-2011

Middle East

In the Middle East, the energy industry remains the main engine of insurance growth.

United Arab Emirates, slowdown after strong growth

Financial centre, Dubai, United Arab Emirates © WiClean, CC BY 3.0

The Emirati market ranks high among the member countries of the Gulf Cooperation Council. With 1.9%, the local market penetration rate is among the highest in the region.

Between 2002 and 2011, premium growth has reached 673%, the world's second highest growth rate, behind Angola.

From 2002 to 2008, the annual premium growth rate ranged between 13% and 41%. At the peak of the global economic crisis, this rate was reduced to 9.6% and 9.4% between 2008 and 2010. In 2011, the market has returned to a double-digit growth.

The market is strained by the fierce competition of the various insurers. The premium rate for non-life risks has reached unprecedented low levels in the region.

Saudi Arabia, a favorable legislative and regulatory framework

Riyadh, Saudi Arabia

Saudi Arabia, the second largest market in the Middle East, totaled 5.4 billion USD in 2012, an increase of 10% compared to 2011.

Since 2003 and the promulgation of a new legislative framework authorizing the establishment of insurance companies that the sector has experienced its great revolution.

Between 2002 and 2011, premium increase amounted to 449% with a peak of 33.79% in 2009. Despite such growth, insurance in Saudi Arabia remains underexploited. As for the United Arab Emirates the market growth margin remains very high.

Evolution of premiums: 2002-2011

in millions USD

Sources: Sigma, Swiss Re