LONDON--(BUSINESS WIRE)--Sub-Saharan African reinsurers continue to be challenged by a difficult operating environment, with competitive pressures on underwriting activities further exacerbated by economic and political concern, according to a new report by A.M. Best.
The report, titled, “Sub-Saharan African Markets Attract Reinsurers Despite Economic Conditions,” states that much of the region has faced high inflation, currency devaluation and electoral disputes, which have caused instability in some economies. Despite the challenging market conditions, the African reinsurance market has experienced material growth over the past decade and has reported respectable financial performance.
Rishwinder Grewal, financial analyst, said: “Legal treaty cessions, domestication policies and recent regulatory changes support regional insurers’ and reinsurers’ efforts to develop their profiles and support their respective markets. Growth opportunities, however, are somewhat tempered by a lack of policy enforcement and greater competition from larger, global reinsurers.”
The report adds A.M. Best expects insurance penetration rates in the region to increase gradually as a consequence of growing investment in infrastructure following the discovery of natural resources, and foreign direct investment is forecast to rise following the resources boom. Reinsurers are likely to see more opportunities to underwrite construction and engineering risks in the short-to-medium term.
A.M. Best anticipates that the technological developments being implemented within the marketplace will positively impact insurers, and subsequently, reinsurers, through an increase in premium volumes. Improvements in mobile technology, applications and telecommunication infrastructure will allow a wider audience to access insurance cover and gradually bring down the current barriers to purchasing insurance. In addition, the introduction of these technologies will translate into claims management efficiencies; in particular, through reducing potential fraud within the marketplace as automated, real-time databases replace manual paperwork.
Jalpa Thanky, senior financial analyst, said: “Amid the challenging market conditions, for regional players in particular, the ability to innovate, attract technical expertise and subsequently execute strategic objectives will determine how successfully reinsurers can capitalise on the market’s opportunities. Regional reinsurers will need to step up and invest in innovation in order to stay ahead of the curve and retain premiums within the continent.”
To view a short video interview with Thanky about the report, please visit http://www.ambest.com/v.asp?v=subsaharan918.
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=278310.
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