The role of insurance in financial inclusion in Africa is often a second thought and that can change in the next decade if insurers use the right market information and technology, President Paul Kagame has said.

The Head of State delivered the message yesterday to nearly 700 representatives of insurance and reinsurance companies in Africa at the end of the 41st Conference and Annual General Assembly of the African Insurance Organisation (AIO) in Kigali.

From Sunday until yesterday, the delegates have discussed how to scale up insurance in Africa by using appropriate research and development as well as recent developments in technology such as the use of mobile money and satellites to reach out to farmers.

President Kagame said a growing middle class in Africa remains an advantage for insurance companies even if the low rate of insurance penetration on the continent had remained a challenge.

"With incomes rising in most African countries in recent years, more wealth is being created. As people acquire more, they have more to protect,” he said.

He said the insurers stand to benefit from improved economies because it is something everyone on the continent can now relate to–from the farmers seeking to protect themselves from crop failure, to the entrepreneurs who dream of expanding businesses, and from parents determined to secure education for their children, to the children worried about medical care for their parents.

"As you have surely discussed, the low penetration of insurance products in Africa is both a challenge and an opportunity–the untapped potential for innovation is huge, and so is the scope for increased public-private partnership,” Kagame said.

Insurance penetration

The insurance penetration ratio, which is the gross value of insurance premiums as a percentage of GDP, remains low in Africa at around 2 per cent.

A 2013 report by KPMG, a global audit, tax and advisory services firm, showed the insurance market in Africa is under-developed largely because most Africans cannot afford insurance products as they are busy with meeting their basic needs.

But the report noted that access to insurance products had started to increase steadily in the upper middle income groupings.

In Rwanda, the insurance sector has been performing well in recent years even though the country’s insurance penetration still needs to improve.

"The growth of insurance and financial services in Africa is an important indicator of the continent’s maturing economy. Let us continue to work together, as governments and as companies, all across our beautiful continent, pooling our know-how and resources, until your products and services are within the reach of every family in Africa.” President Kagame emphasised.

The country’s insurance sector recorded good performance last year, with total assets for the sector as of December 2013, increasing by 16 per cent to Rwf230 billion from Rwf199 billion as of December 2012.

Abd el Raouf Kotb, president of AIO, lauded President Kagame for leading the country to stability and improving its governance and development.

Rwanda’s Finance and Economic Planning minister Claver Gatete also highlighted the importance of insurance in Africa.

"As African countries reach middle income level, they need more insurance,” Gatete said.

The AIO is an umbrella body that brings together 315 insurance companies from 45 countries in Africa and 11 associate international members from seven countries outside the continent.