The African insurance sector has turned a new page in its history as the Federation of African National Insurance Companies (FANAF) adopted an inclusive insurance pact to double insurance penetration by 2040.
Following three days of deliberations at the recent General Assembly on Insurance for All, held in Cotonou, Benin, at the initiative of the Federation of African National Insurance Companies (FANAF), the 400 participants from 20 African countries adopted the ‘Pan-African Pact for Inclusive Insurance’. Under the pact, more than 20 resolutions designed to contribute to its implementation were signed.
Africa is one of the regions of the world where the insurance sector is least developed, despite being the continent where the need for risk cover remains enormous. With 19% of the world’s population, it accounts for only 1% of global insurance premiums.
The insurance penetration rate in Africa (excluding South Africa) stands at around 1%. These figures show that insurance is still viewed on the continent as a luxury product reserved for a certain elite, a certain social class.
Yet there is no shortage of insurance needs and market niches to boost the African insurance market. With a penetration rate of just 1%, the potential for growth is huge. Proof of this is that hundreds of millions of Africans are waiting for an insurance product designed with them in mind – one that is simple, affordable, accessible via a mobile phone and payable in real time. FANAF aims to solve this situation.
The holding of the first ‘General Assembly on Insurance for All’ in Cotonou is fully in line with this objective.
“How can we accept that those most exposed to risks are precisely those who are least protected against them? This anomaly is not inevitable; it is a challenge set before us. It is the defining issue of our generation,” emphasised FANAF president Mamadou Koné at the opening of the conference.
“Our continent rightly speaks of food sovereignty, energy sovereignty and financial sovereignty. It is time to also talk about protection sovereignty. Growth that does not protect remains vulnerable, and financial inclusion that does not protect remains incomplete. Insurance that protects only those who are already secure has failed in its mission.”
In his view, inclusive insurance is not a charitable endeavour; rather, it is at the very heart of the insurance business. His rallying call is that the continent must therefore move away from the traditional approach of offering products centred on businesses and the wealthy, which leaves vulnerable groups by the wayside. As Koné emphasised, protecting the excluded and helping to build robust businesses are not mutually exclusive; both are part of the same mission.
The adoption of the ‘Pan-African Pact on Inclusive Insurance’ marks a decisive step towards this paradigm shift. The approval of this strategic document was accompanied by the adoption of some 20 resolutions designed to contribute to its implementation across the various markets within the FANAF region.
The four priority segments
One of the resolutions adopted was a commitment by market stakeholders to double the insurance penetration rate in the FANAF region by 2040 by focusing their collective efforts on the agricultural, informal, health, life insurance and small and medium-sized enterprise sectors.
In line with this objective of the Pact, a resolution was passed to give priority to those excluded from insurance. To this end, the Cotonou meeting decided that “any product rolled out under the Pact must explicitly identify the segment of the population it targets from among the four priority segments: smallholder farmers and workers in the agro-pastoral sector, workers in the urban informal sector, women, and small and medium-sized enterprises.”
Following on from this resolution, FANAF member insurers have committed to designing and marketing, by 31 December 2027, at least two products falling within the four categories defined by the pact, namely: index-linked agricultural insurance, supplementary health insurance, affordable life insurance, death and combined insurance and savings schemes, and multi-risk insurance for SMEs.
Another resolution adopted during the meeting calls on the member states of the FANAF region to introduce new insurance obligations, to support the expansion of mutualisation and the acceleration of inclusive insurance, whilst urging them to ensure the effective implementation of existing obligations.
They identified the following areas as relevant to these new insurance obligations: fire and public liability for markets, railway stations and other premises open to the public, public transport of passengers and goods, comprehensive home insurance for rented accommodation, agricultural insurance linked to seasonal loans and subsidised inputs, civil liability insurance for schools and universities, and cover for natural and climate-related disasters.
Paying out claims within a maximum of 72 hours
To ensure they are effectively implemented, these obligations must be “accompanied by affordable premiums, monitoring mechanisms to guarantee their effectiveness, and rapid compensation arrangements so that they are perceived by the public as protection rather than a tax.”
Governments have committed to a range of measures to strengthen inclusive insurance, including tax incentives to boost uptake, the deployment of technological innovations such as artificial intelligence, and gender-focused products tailored for women.
Other commitments include integrating insurance education into national financial literacy programmes and introducing the FANAF Inclusive Insurance Label to certify products that meet minimum standards and rebuild public trust.
Stakeholders also pledged to adopt a “last-mile” distribution approach, combining digital platforms with local human networks to reach people where they live and work. These resolutions, agreed in Cotonou, are aimed at enhancing the effectiveness and accessibility of inclusive insurance.
Convinced that late payment of claims is one of the factors that tarnishes the sector’s image and hinders public uptake of insurance products, the conference identified “rapid settlement of claims as the key driver of trust between insurers and policyholders”. To achieve this, insurers committed to the pact’s requirement to ensure compensation is paid within 72 hours of receiving all the necessary legal documents.
With a view to avoiding the bitter experience of ambitious development initiatives on the continent that have failed to deliver expected results, participants at this meeting agreed to implement rigorous monitoring and evaluation tools, with a schedule for accountability, particularly at FANAF’s Annual General Meetings.
In any event, following the adoption of the historic Pact, the time for procrastination appears to be over; what is needed now is urgent action to put it into practice.
“We have talked enough. We have analysed the situation enough. We have made enough promises. The urgent need now is to act,” said Koné, in no uncertain terms, at the close of the proceedings.
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