To foster sustainable economic development and resilience, the Rwandan insurance sector must expand its product range to better meet the evolving needs of the market, experts have said.
The insurance sector saw its assets increase by 17.6 per cent to Rwf1.03 trillion in the first half of2024. However, insurance penetration remains at 2.1 per cent, way below the global average of 7 per cent, reflecting an industry with untapped potential.
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To address the challenges facing the sector, insurance actors, regulators, and other financial players gathered in Kigali on October 2 to share insights that will contribute to the development of a national insurance strategy.
The discussions, held at the Insurance Strategy Forum, centered around strategies aimed atstrengthening regulatory frameworks, fostering innovation, and increasing insurance penetration in Rwanda.
John Rwangombwa, Governor of the National Bank of Rwanda (BNR), said that insurance is vital to Rwanda’s economy as it offers protection while driving growth through savings and long-term investments.
"A strong insurance sector fosters resilience, and encourages innovation and expansion. As risks like climate change and cyber threats emerge, a dynamic and adaptable insurance industry is essential,” he noted.
He highlighted that Rwanda’s insurance industry has made commendable progress over the past decade, with the number of insurance companies doubling, and total assets increasing by 114 per cent.
Yet, the industry still grapples with challenges. Insurance penetration rate currently stands at 2.1 per cent, meaning that Rwandans and businesses remain vulnerable to life uncertainties.
"This is a clear reminder that there is much to be done to extend the benefits of insurance to everyone,” Rwangombwa said.
The increasing complexity of risks, technology advancements and shifting customer expectations require transformation in the industry that must be driven by innovative solutions to such challenges.
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"Creating a national insurance strategy is both urgent and essential,” the Governor said, noting that the strategy will address key issues such as closing coverage gaps, leveraging new technologies, and developing products relevant to the people.
Develop innovative products
Corneille Karekezi, Managing Director of African Reinsurance Corporation, called on insurers to be customer-centric, saying that in some African countries insurers have often been accused of manipulation when it comes to interpretation of insurance contracts in case of claims settlement.
"We should ask ourselves how many lives compared to the entire population we have positively touched through insurance, as well as our contribution to the social protection when it comes toincreasing the proportion of young and large population of Africa who will soon get older with more financial safety net,” he noted.
Karekezi said that this entails justly and fairly pricing motor insurance covers or how insurance benefits victims of road accidents, without compromising the financial sustainability of insurance companies.
However, when it comes to insurance penetration, he noted that in various African regions, very few government authorities fully and practically appreciate with the right perspective and required sense of urgency that insurance is an integral part of national economic growth.
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On the other hand, Sammy Makove, CEO of Insurance Regulatory Authority (IRA) in Kenya, said that while it is commendable to learn the best practices from other economies, it shouldn’t be about ‘copy and pasting’ but tailoring solutions to the needs of people according to the country’s realities.
He emphasised that driving growth in the insurance sector requires an enabling environment, appropriate products, and fair treatment of customers.
This was reiterated by Dianah Mukundwa, CEO of Sonarwa, who stated that, "In insurance, we have products, but we need to reach underserved populations. By tailoring solutions like micro-insurance and using group savings, we can improve access and inclusion.”
What new strategy brings to the table
According to the central bank Governor, the insurance strategy seeks to establish a new legal and regulatatory framework that not only provides stability and transparency but also inspires confidence in investors.
"We need laws, regulations, and policies that evolve with time, fostering innovation and sustainable growth,” Rwangombwa remarked.
The strategy is expected to drive innovation through encouraging insurers to offer insurance solutions that address emerging risks and cater to diversified needs of people, while ensuring data protection and privacy strategies are robust.
The Governor reiterated the need to improve financial literacy in Rwanda, saying it was very criticalthat every Rwandan understand the value of insurance.
According to BNR, the strategy will include a climate and disaster management programme aimed at addressing climate-related risks. This is in addition to strengthening public-private partnerships.