Common Questions About the African Insurance Landscape

What is the insurance penetration rate in Africa? The insurance industry in Africa has historically had one of the lowest penetration rates globally, with one report from 2020 showing an average rate of around 2.0% of GDP, far below the global average of 7%.

Which country dominates the African insurance market? South Africa is the most dominant player, accounting for the vast majority of all African insurance premiums, particularly in the life insurance sector.

What are the main challenges facing the sector? Key challenges include low public awareness and confidence, low purchasing power, and a lack of adherence to compulsory insurance laws. Regulatory bodies also flag issues like vague policy wording, unclear claims processes, and mis-selling of policies.

Is travel insurance mandatory for entry into African countries? This varies by country and visa type, but for most travelers to South Africa, it is encouraged as international health insurance coverage may not carry over.

Essential Questions for Consumers in Africa to Ask

When purchasing insurance in countries like South Africa, consumers should ask specific questions to ensure adequate coverage.

Questions to ask your insurer/broker before buying a policy:

Is my current cover sufficient for my needs? Life changes like buying a home, starting a family, or expanding a business require policy reviews to ensure adequate coverage.

How are my premiums calculated and why don't they decrease as my asset's value drops (e.g., a car)? Premiums are based on a variety of risk factors, and understanding these can provide clarity on costs.

What is the process for making a claim, and what kind of support is offered? A clear understanding of the claims process and the availability of support during a crisis is crucial.

Does this policy cover specific, less common risks? Inquire about industry-specific risks (for businesses), damage from natural disasters (e.g., flood/earthquake), or specific exclusions (e.g., coverage for car races or aviation accidents on safari trips).

How is fault determined after an accident? While the insurer typically handles this process, knowing the general procedure can help manage expectations during a stressful time.

Questions to ask your broker specifically:

Do you have professional indemnity cover? This protects you financially if the broker is negligent.

Are you properly licensed to sell this specific product? Verify their credentials and ensure they are registered with the relevant financial sector authority, such as the Financial Sector Conduct Authority (FSCA) in South Africa.

How are you compensated for your services? Generally, brokers are paid by the insurance company, and you shouldn't be charged additional fees.