COVID-19 containment and mitigation measures in sub-Saharan Africa (SSA) have restricted the movement of people, goods and services. This has affected insurers’ operations, which, to a large extent, have traditionally required physical engagement. It is also affecting insurers’ ability to launch new products, conclude new sales, collect premiums, service existing customers and process and pay claims.
Moreover, the economic crisis triggered by the pandemic is affecting premium and investment income, and balance sheets are put under strain. While the pandemic has exacerbated pre-existing weaknesses of the insurance sector in SSA, it also provides an opportunity for insurers and regulators to become better equipped to embrace and adopt innovation and develop their insurance markets.
This note takes stock of the impacts of the pandemic on insurers, based on interviews with 34 insurers, insurtechs, reinsurers and insurance and broker associations across 18 markets, looking at the impacts on operations, impacts across the insurance product cycle, balance sheet impacts and the regulatory engagements and responses. The report identifies key opportunities for insurance and regulators.
The pandemic and the accompanying safety measures have affected the way insurers operate, the insurance product cycle, the potential reputation of insurers due to COVID-19 exclusions, as well impacting balance sheets that will likely result in liquidity constraints. There has been varied engagement from regulators; with some being very proactive in their communication surrounding the pandemic while others have been slow to respond and have created feelings of uncertainty in the insurance sector.
While the pandemic has exacerbated pre-existing weaknesses of the insurance sector in SSA, the consultations for this study indicate that it also provides an opportunity for insurers and regulators to become better equipped to embrace and adopt innovation and develop their insurance markets. Some of the opportunities identified in the report are that the forced digitisation of insurers can help them enhance their efficiency as well adopt the remote on-boarding of customers, and COVID-19 has created an imperative for regulators to address the barriers to digitisation as well as proactively encouraging innovation in the sector.
To read about the other opportunities identified, please download the full report.