Zambia Most Attractive Market For Investments In Insurance In Sub Saharan Africa

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Zambia has been recently named by Ernst & Young (EY) as the most attractive market out of seven Sub Saharan countries in terms of investment opportunities in the insurance industry towards 2018.

It was indicated in the report titled “Waves of Change Revisited: Insurance Opportunities in Sub Saharan Africa (SSA)” recently released by EY, which analyzed the growth potential for the insurance sector in SSA due to the low penetration of insurance products and its position as the second fastest growing region after developing Asia.

Zambia was evaluated together with Kenya, Malawi, Tanzania, Uganda, Ghana, and Nigeria through a survey which involved 125 insurance executives in the cited countries and the analysis of insights from key executives in this industry.

Zambia, in terms of potential growth, volatility of returns, price competition, and sales channels’ innovation, constitute the most attractive mix of reward-risk followed by Ghana and Kenya towards 2018, states the report.

Regarding potential growth, Zambia ranks first with 11% towards 2018 followed by Malawi with 10% and Nigeria closing the list with 4% growth in the same period.

According to EY, GDP potential growth will be the main driver of insurance products’ premiums growth in the short-term since the survey ranks it first with 41% followed by product innovation with 22%, regulatory changes with 15%, competition 11%, and technological changes with 10%.

In addition, Zambia’s low penetration of insurance products by ranking second in terms of premium paid per capita of USD 18 against South Africa which tops the list with USD 925, make the country the most attractive with significant upside on premiums growth estimated at 11% followed by Nigeria with 10% and Kenya closing the list with 6% towards 2018.

Significant population growth together with raising income and low penetration of insurance products, represent a great potential for both life and non-life products in Zambia and rest of the region, explained EY’s East and Central Africa Financial Services Advisory Leader, Mr. Steve Osei-Mensah.

Moreover, Zambia holds the highest rate of people living in cities excluding Nigeria and Ghana, whom account for 40% of its population and are meant to support the industry’s growth despite the number of insurance brokers have decreased from 48 in 2014 to 33 in 2015, according to EY.

According to Zambia’s Pension and Insurance Authority (PIA), the insurance industry has grown steadily in the recent years reaching 39 insurance brokers in 2016, 2 local reinsurance companies, 2 reinsurance brokers, and 222 insurance agents which have driven the gross written premium (GWP) turnover from ZMW 450 million in 2013 to ZMW 650 million in 2014.