Mistrust, traditional beliefs, religion and poverty are some of the major factors that influence people decisions as far as getting insurance cover is concerned, experts from Agusto, a Nigerian credit rating and risk management firm has noted.

"Non-life insurance penetration is still low because people neither believe in it nor are aware about it, most people still link insurance with life insurance and not investments which is a big challenge threatening the survival of the sector,” Edward Olajide, the Agusto East Africa regional representative, said during a workshop on insurance credit ratings in Kigali recently.

However, this negative perception on insurance could change in the near future due to increased urbanisation, expanding middle-class and technological advancement, Olajide told Rwandan insurers.

Olajide said there are signs that insurance penetration in emerging economies is also slowly growing due to increased literacy levels.

According to sector players, sluggish returns on investments, low capacity, poor enforcement of regulations, and low income levels are some of the challenges affecting the growth of the sector in Rwanda. Analysts believe that by embracing ratings, the situation could change and create additional confidence among policy-makers and investors.

"It is one way of providing independent information that instills confidence among stakeholders,” Jean Chrysostome Hodari, SORAS boss, said. He added that this could in a way boost policy uptake.

Jean Pierre Majoro, the Association Rwanda Insurance Companies executive secretary, said there is a need for massive sensitisation campaigns on the benefits of insurance if the sector is to attract more customers. However, some analysts are blaming low insurance penetration rate to bureaucratic procedures that one has to follow to get a policy or claim compensation.

Statistics from National Bank of Rwanda indicate that the sector’s total assets reached Rwf230b in 2013 from Rwf199b during 2012, reflecting a growth of 16 per cent.

Globally, the African continent lags behind other continents with only 1.5 per cent insurance penetration and Latin America and Caribbean 3.6 per cent. Europe and North America had the highest rate of premium penetration, with Europe at 33.28 per cent, North America 20.29 per cent and Asia with 8.9 per cent.

Recent statistics indicate that Rwanda, Algeria, Nigeria and Egypt are the African countries with the least rate of insurance penetration, with Rwanda at only 2 per cent penetration rate.