Business Trends & Strategies, Economy & Finance, Insurance Industry Reports

Lagos Population: A Potential For Insurance Growth, Article

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Lagos State has great potential to attract insurance and widen the scope of the industry like other growing cities in .

Ghana was identified as one of most attractive African countries for insurance industry growth, and the country has the most attractive mix of risk and opportunities for the insurance industry, according to a survey of seven key markets in East and West Africa by Ernest & Young (EY).

The report noted that the sub-Saharan economies are among the fastest growing in the world and the outlook for the region’s gross domestic product (GDP) growth is strong despite falling commodity prices and the slowdown in China’s economic growth.

It said that fast-growing cities, such as Lagos and Nairobi, along with many others in the region, are expected to record sustained growth in population and urbanisation, and the independence and self-reliance as societies urbanise, would generate more need for insurance. Low in the region, currently less than 3 per cent of the GDP, and the rising affluence and more disposable income among the middle class, are also expected to increase demand for insurance products.

The survey examined 125 insurance executives and regulators in the East African countries of Kenya, Malawi, Tanzania, Uganda, and Zambia, alongside two West African countries,  Ghana and Nigeria. According to the study, there is huge potential for both life and non-life due to significant population growth and rising demand, rising incomes, and the relatively low penetration of life and non-life .

Expectations for insurance demand growth were highest in Ghana among the countries, with 94 per cent of the survey respondents citing consumer demand as the main driver of insurance growth. Across the seven countries, survey respondents ranked consumer demand above 50 per cent as a driver of the industry.

Technological interventions are also expected to drive growth, notably cross-industry collaborative and online and mobile platforms.

“While the insurance outlook for is undeniably bright, insurers must be prepared to seize the opportunities. Face-to-face sales, through skillful agents and knowledgeable brokers, will still carry the weight of insurance sales in the region in the medium term. In all seven markets, agents and brokers account for at least 50 per cent of policies sold because consumers still need to be educated as to the importance of insurance coverage,” the report reads in part.

The availability of talent, meanwhile, is the number one challenge identified by respondents in the survey. Shareholders’ demands, and the volatility of returns for shareholders, was the second challenge, followed by technological capacity, distribution and sales, regulation, culture and education of customers, and innovation.

 

 

 

Source: Leadership

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