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Africa Insurance Outlook 2024/2025

Navigating Regulations while Embracing Sustainability

The African insurance industry is undergoing a transformative period, influenced by changing economic landscapes, rapid technological advancements and regulatory reforms. The "2024/25 Deloitte Africa Insurance Outlook" provides an in-depth analysis of these critical developments and emerging trends across the continent.

Amidst economic challenges such as high interest rates and inflation, South Africa's largest insurers, representing over 80% of the insurance market, have demonstrated resilience. We have not seen a significant impacting on insurers' capital positions, and they remain in a strong position to face into the future. The introduction of IFRS 17 took a huge effort to implement and has impacted financial reporting and analysis of financial results – something that will be focused on more over the coming years.  

In South Africa, the Prudential Authority is advocating for robust stress-testing frameworks tailored to liquidity risk. Insurers are now being expected to develop comprehensive governance structures, more relevant measurement techniques, and timely reporting mechanisms that bring liquidity risk management in line with regulatory global best practice.

As climate change and economic inequality become more pressing, the insurance industry is at a crossroads. Insurers are urged to move beyond traditional risk aversion towards creating stakeholder value. By aligning financial products with Sustainable Development Goals (SDGs) and fostering innovation for inclusion and resilience, industry can turn challenges into opportunities, driving sustainable development.

Moreover, streamlining product ranges is essential for improving operational efficiency. South African insurers must address legacy products that inflate costs and hinder strategic growth. By rationalizing these products, insurers can achieve efficiency gains and enhance their competitive edge, ultimately positioning themselves as vital contributors to a sustainable and equitable future.

The East African insurance sector is showing resilience and growth despite macroeconomic and geopolitical challenges, driven by a rising demand for risk transfer solutions. Recent shifts emphasize digital transformation and innovation, aligning with consumer expectations for accessible services. In 2022, the insurance penetration rate in East Africa was 1.39%, with Kenya at 2.14% leading, while Tanzania, Uganda, and Ethiopia had lower rates of 0.62%, 0.74%, and 0.3%, respectively. This presents both growth potential and challenges, necessitating innovation and enhanced customer engagement. The industry's future hinges on its ability to adapt and turn challenges into sustainable growth opportunities. 

Download the Africa Insurance Outlook for insights into the evolving landscape of the African insurance industry, stay informed with the latest trends and developments.

 

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