Global catastrophe losses were some US$269 billion back in 2023, according to the Swiss Re Institute, with only some 40% insured, leaving some $160 billion uninsured.
These figures set the scene for the recent International Conference on Inclusive Insurance 2026 in Rwanda and spoke to the opportunity that exists for insurers to help close the protection gap. However, speaker after speaker agreed that it could not be done by the industry alone but would need collaboration with governments and other stakeholders.
Andrew Kulayige, chair of the Rwanda Insurers Association, added that the picture for Africa is even bleaker, accounting for just 0.9% of the global insurance market, some 19 times lower than global levels.
Worse, he said, was that the penetration level is unequal, meaning that those who are least able to cope with a disaster are also the least likely to have insurance.
He encouraged some 600 delegates from 58 countries who attended the Rwanda forum to remember the human cost of uninsurance. “It is a family which loses their home, a family who spends all their savings, a farmer left without a harvest or a business struggling to survive.”
That human cost was reiterated by a number of speakers, who stressed that the reason for microinsurance was to help those uninsured to build resilience for the future. With penetration levels so low, there was an opportunity in the majority of African markets to grow the insurance slice.
Kulaygie pointed to the Rwandan plans to grow its market from 1.5% penetration now to 5% by 2035, with a series of initiatives including the recently launched inclusive climate insurance solution.
However, as Laura Rosado Lozano, acting chair of the Microinsurance Network (MiN)and co-founder, head of strategy, finance and impact at Axa EssentiALL, pointed out, there are challenges ahead. Lozano listed three of the major barriers:
- The sheer cost of insurance as most traditional insurance is aimed at wealthier sections of society
- Trust – some might find insurance too expensive, particularly when they don’t see the value of it
- Supply – when insurers are dealing with a very small demand for a product, they must think differently in terms of reaching the customer base.
Matthew Genazzini, executive director of MiN, reported on the annual landscape report produced by the network, which reveals only one in 10 people who could have cover are protected by microinsurance and that, despite innovation, it is proving difficult to increase penetration.
That was echoed by Jean Baptiste Ntukamazina, secretary general of the African Insurance Organisation (AIO), who admitted there is a long way to go. He suggested that much of the conversation starts with the regulatory framework enabling microinsurance products. That, he said, existed in many but not all countries “leaving the opportunity mostly untapped”.
He added that there was growth in health and property microinsurance, while consumers still had to see the argument for buying life cover. Funeral insurance has proved the exception, he said, with rapid growth across the continent, particularly in South Africa and in Rwanda. In contrast agricultural products only take off in countries where there is active government support.
What the AIO has found in its research, he said, was that the lower the transaction costs, the higher the chance of success. Generally speaking, distribution accounts for 25% of the cost of the premium, with African costs lower than much of the rest of the world.
Genazzini pointed out that not only were the costs lower in Africa, it also had a more diversified approach to distribution channels with more than 53% of products being sold through more than one method of distribution.
The primary distribution channel for microinsurance remains agents (26%), followed by banks (16%) and microfinance institutions (14%). Brokers account for some 6.3% of sales, while fintech amounts to 2.5%.
Insurers were encouraged not to rush with new products. The provisional MiN Landscape 2026 figures suggest that success both in terms of the number of policies sold and in terms of premium income was not reached until five to nine years after launch.
The numbers also suggest however, that the higher-cost channels might cost more but achieve higher scale.
But ultimately, all speakers agreed, the proof of the pudding is in the eating and it is the claims paid that matters most. The provisional MiN figures suggest the average African claims ratio is around 25%, while products with higher acquisition and administration costs tend to have lower claims ratios.
However, the audience heard a low claims ratio was not the holy grail for insurers – they needed to pay claims to show the value of insurance to insureds, not only to engender trust but also to encourage renewals – something which is tricky to see in the microinsurance space.
There was clear evidence, said Genazzini, that products with higher claims ratios tend to reach greater scale. Pointing to products reaching more than one million customers, the claims ratio sits at 27.2%, while products reaching under 1000 people had a claims ratio of just 19.8%.
Overall, the message was that there is a lot of work to do to turn words into action and that it will take combined efforts from governments, financial institutions and the insurance chain to make a difference.
Delegates were urged to take home a positive action from the conference and not to leave their good ideas in the conference hall, in their hotel rooms or in the airport departure lounge.