How African Insurance Companies Make Profit

Premiums, investments, and the quiet actuary behind Africa’s fastest-growing financial sector

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EXECUTIVE INTRODUCTION

Insurance in Africa is an anomaly. The continent has the lowest insurance penetration in the world — just 3–3.5% of GDP, compared to a global average of 7% . In Madagascar, penetration is below 1% . Yet the industry is also one of the most profitable financial sectors on the continent, with Kenyan insurers alone posting a 4.8-fold increase in net profit to Sh47.2 billion (approximately $350 million) in the first nine months of 2024 .

The paradox is explained by two numbers: premiums and investment income.

African insurers collect premiums — often small amounts from many policyholders — and they invest those premiums in government securities, fixed deposits, and real estate. In Kenya, for example, investment income rose 67.7% to Sh77.44 billion, accounting for the vast majority of the sector’s profits . Underwriting itself (the difference between premiums collected and claims paid) remained technically in loss for many carriers, but the loss narrowed from Sh4.09 billion to Sh1.62 billion .

This is the business model of African insurance: underwriting as a loss leader, investment as the profit centre.

But the industry is changing rapidly. Digitalisation, regulatory reforms, and the rise of embedded and microinsurance are expanding the market to millions of previously uninsured Africans . Mobile platforms now reach more than 18 million policyholders through partnerships with telecom operators . AI is reducing claims processing times by up to 50% and increasing fraud detection rates by 35% .

This ASJ profile examines how African insurance companies make profit: the underwriting cycle, the investment portfolio, the growing importance of bancassurance and embedded models, the role of reinsurance in enabling growth, and the structural challenges that keep penetration low even as profitability soars.

The insurance company is not a charity. It is a risk-pooling machine that generates profit from the spread between premiums collected and claims paid, amplified by investment returns on the “float” — the money held between premium collection and claim payment. Understanding that float is the key to understanding African insurance.

THE TWO PILLARS OF INSURANCE PROFIT

Every insurance company in the world makes money through two channels. The proportions vary by line of business, geography, and market cycle.

Pillar 1: Underwriting Profit (The Core Business)

Underwriting profit is the difference between the premiums an insurer collects and the claims it pays out, minus operating expenses.

The underwriting equation:

Underwriting Profit = Earned Premiums – (Claims Incurred + Acquisition Costs + Operating Expenses)

When an insurer collects more in premiums than it pays in claims and expenses, it has an underwriting profit. When the opposite occurs, it has an underwriting loss.

The loss ratio (claims divided by premiums) is the critical metric. A loss ratio of 70% means that for every GHS 1 in premiums, the insurer pays GHS 0.70 in claims, leaving GHS 0.30 for expenses and profit.

The combined ratio (claims + expenses divided by premiums) determines profitability. A combined ratio below 100% means the insurer is making an underwriting profit. A combined ratio above 100% means it is losing money on its insurance operations before investment income.

African underwriting reality: In many African markets, the combined ratio for non-life insurance exceeds 100%, meaning insurers lose money on underwriting. The Kenyan insurance sector, for example, reported an underwriting loss of Sh1.62 billion for the nine months to September 2024 — an improvement from the Sh4.09 billion loss in the prior period, but still a loss .

The motor insurance segment is particularly problematic. In Kenya and South Africa, rising claims costs, fraud, inflation-driven repairs, and aggressive price competition have pushed loss ratios above sustainable levels, forcing some insurers to scale back underwriting exposure or exit motor segments entirely .

Pillar 2: Investment Income (The Profit Engine)

When an insurer collects premiums, it does not keep that cash idle. It invests the “float” — the money held between the time premiums are collected and the time claims are paid — in interest-bearing assets.

The investment portfolio of African insurers (based on Kenyan data, September 2024) :

The shift toward government securities: In 2014, less than 50% of insurers’ investments were in government paper. By September 2024, that figure had risen to 70.9% . Insurers have reduced exposure to the Nairobi Securities Exchange to below 3% of their investment portfolio, preferring the relatively stable returns of government securities.

Investment income performance (Kenya, 9M 2024):

Investment income alone (Sh77.44 billion) exceeded total industry net profit (Sh47.17 billion) — meaning that without investment income, the industry would have reported a significant loss .

This is the African insurance business model: Use underwriting to generate float (premiums), invest the float in high-yield government securities (which carry low credit risk but reflect the high interest rate environment of many African economies), and earn a spread. The underwriting itself may lose money, but the investment returns more than compensate.

The Float: Insurance as an Asset Management Business

The “float” is the technical term for the money an insurer holds that belongs to policyholders (premiums paid but not yet earned, reserves for future claims). Warren Buffett, whose Berkshire Hathaway is built on insurance float, describes it as “money we hold temporarily that belongs to someone else.”

How float generates profit:

In high-interest-rate environments (common across Africa, with central bank rates frequently in double digits), the float generates substantial investment income even if underwriting margins are thin or negative.

The scale of African insurance assets: Across 28 African countries, Insurance assets exceed $320 billion, with South Africa alone contributing nearly $258 billion, or about 79% of the total. When combined with pension fund assets, the total institutional investable pool surpasses $777 billion — a figure the Africa Finance Corporation sees as a major untapped source for long-term development financing. .

THE UNDERWRITING LANDSCAPE: LIFE VS. NON-LIFE

Insurance is not a monolith. The profit dynamics differ significantly between life insurance (long-term policies, savings elements, predictable claims) and non-life insurance (short-term, volatile claims, higher frequency).

Non-Life (General) Insurance

Non-life insurance includes motor, property, health, travel, and liability coverage. It is typically short-duration (one year or less), with claims frequency that is more predictable but also more volatile.

Characteristics of non-life insurance in Africa:

The motor insurance crisis: In Kenya and South Africa, digital platforms are accelerating policy issuance and expanding access, often without a corresponding evolution in how risks are structured or transferred. Rising claims costs, fraud, and aggressive pricing have pushed loss ratios above sustainable levels for several insurers, forcing some to scale back underwriting or exit segments entirely .

The improvement story (Kenya, 2024): Despite these challenges, underwriting losses narrowed significantly in 2024 :

Medical insurance moved from a Sh1.39 billion loss to a Sh1.18 billion profit — the most dramatic turnaround, driven by better pricing, improved claims management, and increased uptake .

Life Insurance

Life insurance is fundamentally different. Policies are long-term (10–30 years or more), often include a savings or investment component, and claims (death benefits) are less frequent but larger when they occur.

Why life insurance matters for African insurers:

• Longer investment horizon: Life premiums can be invested in longer-duration assets (infrastructure bonds, real estate, private equity) that offer higher yields

• Stable premium flow: Policyholders pay regularly (monthly, quarterly, annually), providing predictable cash flow

• Lower claims frequency: Death and disability claims are less frequent than motor accidents, allowing for more stable underwriting

• Saving component: Many life policies include an investment element (endowment, whole life), generating fee income

The challenge in Africa: Life insurance accounts for less than 30% of insurance policies in most African countries, with most policies concentrated in non-life segments like auto, health, and industry insurance, largely driven by regulatory mandates and compulsory business requirements .

This is a missed opportunity. Life insurance naturally aligns with long-term investments and infrastructure funding, yet it remains underdeveloped due to low public awareness, limited trust in long-term financial commitments, and the dominance of informal employment (which does not provide group life coverage) .

DISTRIBUTION: THE BATTLE FOR CUSTOMER ACCESS

Insurance is a push product, not a pull product. Most people do not wake up wanting to buy insurance. They buy it because someone sells it to them — or because it is bundled with something they are already buying.

Bancassurance: Insurance Through Banks

Bancassurance — the sale of insurance products through bank branches — has become a significant distribution channel across Africa.

Uganda case study: Bank of Africa Uganda’s bancassurance commission earnings rose from UGX 272 million in August 2024 to UGX 655 million in August 2025 — an increase of over 140% . Life insurance commissions jumped from UGX 115 million to UGX 402 million, while general insurance commissions grew from UGX 157 million to UGX 253 million .

These figures far exceed the industry’s average growth rate of 18%, according to the Insurance Regulatory Authority of Uganda .

Why bancassurance works:

Bancassurance now contributes over 15% of all insurance premium volumes in Uganda, up from less than 5% five years ago . Success is being driven by data-led segmentation, bundled offerings, and multichannel delivery. Banks that have invested in digital infrastructure, advisory tools, and agile product development are gaining a clear advantage.

Embedded Insurance: Insurance as Part of Something Else

Embedded insurance is the most significant innovation in African insurance distribution. Rather than selling insurance as a stand-alone product, insurers partner with companies that already have customer relationships — telecoms, fintechs, digital lenders, PAYGO solar companies — and embed coverage into the existing transaction.

Turaco’s model (Kenya, Uganda, Nigeria, Ghana):

Turaco is a full-stack inclusive insurance company providing affordable health and life insurance to underserved mass-market consumers . Its model is built around deep partnerships with fintech companies, digital lenders, and financial institutions, enabling seamless distribution and low-cost premium collection through existing payment channels .

The PAYGO partnership case study:

Turaco partnered with a major pay-as-you-go (PAYGO) financing company (solar home systems, financed cell phones). Because customers were already making regular payments to the PAYGO company, adding small insurance premiums became seamless and intuitive .

Results of the embedded model:

• Customers benefited from trusted brands and familiar payment channels

• Insurance became easy to adopt, with minimal behavioral change required

• The PAYGO partner gained a competitive differentiator in a crowded market

• Credit risk decreased: Insured customers were 60% less likely to default on their loans compared to uninsured customers 

• Claims were processed quickly, with paperless systems

Scale achieved: Over five years, Turaco has insured more than 5 million people across its markets .

The key lesson for embedded insurance: Partnerships must deliver clear commercial value to all parties. The PAYGO partner saw improved loan portfolio quality (60% lower default rates), which convinced the company to deepen its collaboration with Turaco .

Microinsurance: Reaching the Base of the Pyramid

Microinsurance — small-ticket policies with low premiums and simplified claims — is expanding rapidly across Africa. Mobile platforms and embedded insurance solutions now reach more than 3.5 million people in Ghana, Kenya, Nigeria, and Uganda, with claims processed in an average of four hours through automated systems .

Why microinsurance works:

The reinsurance constraint: As microinsurance scales, access to purpose-driven reinsurance capacity becomes critical. Digital insurance is expanding faster than the risk frameworks that support it, particularly in high-volume segments . Reinsurance — the insurance that insurers buy to protect themselves against large or accumulated losses — is now being repositioned as a “frontline enabler of growth” .

The Mobile Money Connection

Integrated mobile solutions now reach more than 18 million policyholders through partnerships with telecom operators that simplify enrolment via mobile payment systems . Premiums can be deducted automatically from mobile money wallets, and claims can be paid directly to the same wallets — creating a seamless, cashless loop.

AXIAN Group’s approach: The pan-African conglomerate, which operates in 21 African countries and has 42 million mobile subscribers and 23 million mobile-money accounts, has launched VIA Insurance and VIA Assurance in Madagascar . The company plans to deploy insurance through its telecom and fintech platforms, bundling coverage with handset financing and mobile phone loans .

“Claims settlement is the definitive test of underwriting credibility. Turnaround time, documentation simplicity and contractual transparency directly affect persistency ratios and portfolio retention.” — Hassane Muhieddine, CEO of AXIAN’s financial services cluster 

The Trust Deficit

Despite these innovations, a fundamental problem remains: many Africans do not trust insurance.

The distrust stems from:

• History of opaque processes: Policyholders could not understand what was covered and what was excluded

• Slow claims settlement: Delays in payment created a perception that insurance was a scam

• Confusing exclusions: Fine print that seemed designed to deny coverage

• Lack of transparency: Policyholders had no visibility into claims status

The shift to digital — with automated claims processing, real-time tracking, and transparent policy terms — is beginning to rebuild trust. AI-powered chatbots provide 24/7 support; in Kenya, Britam’s “Bella” chatbot has boosted policy sales by more than 40% .

THE ROLE OF REINSURANCE: THE INSURER’S INSURER

Reinsurance is the invisible backbone of the insurance industry. Insurers buy reinsurance to protect themselves against large or accumulated losses — a flood that affects thousands of policyholders, a plane crash, a pandemic.

How Reinsurance Works

Why Reinsurance Matters for African Insurers

1. Capacity to write large risks

Without reinsurance, an African insurer could not write a policy for a large mining operation, a port, or a power plant. The potential loss would exceed the insurer’s capital. Reinsurance allows the insurer to cede (transfer) part of that risk, keeping only what it can absorb.

2. Protection against catastrophic accumulation

A single flood, drought, or cyclone can affect thousands of policyholders simultaneously. Without reinsurance, that single event could bankrupt an insurer. Reinsurance spreads the risk globally.

3. Regulatory capital relief

Regulators require insurers to maintain capital commensurate with their risk exposure. By ceding risk to reinsurers, insurers reduce their required capital, freeing capital for other uses.

4. Access to expertise

Reinsurers provide pricing guidance, risk modelling, and claims management support. For African insurers writing new or complex risks, this expertise is invaluable.

The Reinsurance Gap in Africa

Digital insurance is scaling faster than the risk frameworks that support it . As policy volumes rise — particularly in motor insurance — weak risk foundations can quickly translate into sector-wide instability.

The motor insurance warning: In several African markets, digital platforms are issuing policies at unprecedented speed without a corresponding evolution in risk structuring, pricing discipline, or risk transfer mechanisms. “The opportunity is not just to grow, but to grow correctly,” said Abhishek Jain, CEO of EIRS Digital Insurance Ecosystem .

The mispricing problem: Africa is often labelled “high-risk,” but in many cases, it is “simply mispriced due to lack of local insight.” When on-the-ground intelligence is combined with structured reinsurance and access to Middle Eastern capital, “the risk becomes far more manageable — and far more attractive” .

The solution: Reinsurance, long viewed as a backend mechanism, is now being repositioned as a frontline enabler of growth. Without it, insurers face limits on how much risk they can absorb, particularly in volatile segments such as motor, trade credit, and infrastructure .

INVESTMENT STRATEGY: WHERE AFRICAN INSURERS PUT THEIR MONEY

The investment portfolio is the primary profit driver for African insurers. Understanding where they invest — and why — is essential to understanding the business model.

The Shift to Government Securities

In Kenya, insurers have shifted from equities to government securities over the past decade. In 2014, less than 50% of their investment portfolio was in government paper. By September 2024, that figure had risen to 70.9% .

Why the shift?

The trade-off: By concentrating in government securities, insurers are exposed to sovereign risk. If a government defaults (as Ghana did on part of its debt in 2022-2023), insurers suffer losses. Diversification across asset classes would reduce this risk but requires greater investment expertise.

The Opportunity: Infrastructure Financing

Africa’s insurance and pension funds hold over $777 billion in assets under management . Yet a significant portion remains locked in short-term, low-risk instruments instead of being channeled toward vital infrastructure and industrial investments.

The Africa Finance Corporation (AFC) report highlights:

• Across 28 African countries, insurance assets exceed $320 billion 

• Life insurance — which naturally aligns with long-term investments — accounts for less than 30% of policies in most African countries 

• Most policies are concentrated in non-life segments (auto, health, industry), driven by regulatory mandates and compulsory requirements 

Constraints to long-term investing:

The reform opportunity: Governments and regulators can encourage institutional investors to allocate a larger share of their assets toward long-term investments while expanding insurance participation through financial education, market transparency, and mandatory savings frameworks .

DIGITAL TRANSFORMATION: AI, MOBILE, AND THE FUTURE OF UNDERWRITING

Digitalisation is reshaping African insurance at every level — distribution, underwriting, claims processing, and fraud detection.

AI in Claims Processing

Artificial intelligence is streamlining insurance operations across the continent:

Embedded and API-First Models

Embedded insurance — where coverage is sold through non-insurance platforms — is the fastest-growing distribution channel. Turaco’s partnership model demonstrates the potential: 5 million policies issued across four countries in five years .

The API advantage: By building APIs that connect to partner platforms, insurers can offer “one-click” insurance at the point of sale — when a customer buys a phone, takes a loan, or books a flight. This reduces friction to near zero.

The Data Opportunity

Mobile phones generate massive data on user behaviour: airtime purchases, mobile money transactions, location data, social network connections. Insurers can use this data for:

• Risk assessment: Payment history predicts default risk; mobility patterns predict accident risk

• Premium pricing: Behaviour-based pricing (usage-based insurance) rewards safe driving

• Fraud detection: Anomalies in claims data trigger investigations

• Customer retention: Data on when policies lapse enables targeted retention offers

The privacy constraint: Data protection regulations (GDPR in Europe, similar laws emerging in Africa) limit how insurers can use customer data. Consent must be explicit, and data must be secured.

The Digital Challenge: Outpacing Risk Capacity

The most significant risk from digitalisation is that growth outpaces underwriting discipline. As EIRS warns: “Digital insurance is scaling faster than the risk frameworks that support it. In several African markets, particularly motor insurance, growth is not adequately backed by reinsurance discipline. That creates systemic pressure” .

The message is clear: technology may drive access, but reinsurance will determine sustainability .

CHALLENGES & RISKS

1. Low Penetration and the Trust Deficit

Insurance penetration in Africa is 3–3.5% of GDP, half the global average of 7% . In Madagascar, penetration is below 1% .

Why penetration is low:

• Trust: Historical slow claims settlement and opaque exclusions have damaged credibility

• Affordability: Premiums are too high for many potential customers

• Awareness: Many Africans do not understand what insurance is or how it works

• Distribution: Insufficient reach to rural and low-income populations

• Informal economy: Without formal employment, there is no employer-sponsored coverage

The consequence for profitability: Low penetration means small markets. Even the most profitable insurers in Africa are tiny compared to their global peers. The African market is growing (projected to reach $166.1 billion by 2034), but from a very small base .

2. Motor Insurance Losses

Motor insurance remains a core pillar of the industry in markets like Kenya and South Africa, yet profitability is under sustained pressure. Rising claims costs, fraud, inflation-driven repairs, and aggressive price competition have pushed loss ratios above sustainable levels for several insurers .

The digital dimension: Digital platforms are accelerating policy issuance without a corresponding evolution in how risks are structured or transferred. Growth without underwriting discipline is unsustainable.

The response: Some insurers have scaled back underwriting exposure or exited motor segments entirely . Others are investing in telematics (usage-based insurance) to price risk more accurately.

3. Fraud

Insurance fraud is a significant cost driver across Africa. Staged accidents, inflated claims, and fake policies all drain profitability.

AI as a solution: South African insurers report that AI tools have increased fraud detection rates by 35% while halving investigation times . Automated systems can flag suspicious claims for human review, reducing losses.

4. Regulatory Constraints

Insurance is heavily regulated: capital requirements, premium caps, policy terms, claims handling procedures, and investment restrictions all affect profitability.

The compliance burden: Meeting regulatory requirements costs money — in staff, systems, and reporting. Smaller insurers struggle disproportionately.

The protectionism risk: Some countries restrict foreign ownership of insurers, limiting competition and keeping prices (and profits) higher than they would be in an open market.

5. Climate Change and Catastrophe Risk

Climate change is reshaping the insurance sector as extreme weather events become more frequent and severe . Floods, droughts, and cyclones are occurring with greater intensity.

The response: Insurers are developing new risk assessment models and parametric products, which allow for rapid payouts based on predefined thresholds (e.g., rainfall exceeding X mm) rather than lengthy loss assessments .

The uninsurable risk: In some areas, climate risk may become uninsurable. Insurers will withdraw coverage, leaving households and businesses exposed. This is a long-term structural threat to the industry.

6. Currency Volatility (for Pan-African Insurers)

Insurers operating across multiple African countries face currency risk. Premiums collected in Ghanaian cedis, Nigerian naira, or Kenyan shillings must be reported in a single currency for group accounts. Depreciation of local currencies against the dollar or euro erodes the value of premiums when converted.

Hedging constraints: Currency hedging instruments are limited or unavailable in many African markets. Insurers absorb currency losses or adjust pricing.

7. The Reinsurance Constraint

As digital insurance scales, access to purpose-driven reinsurance capacity is becoming the binding constraint . Without adequate reinsurance, insurers face hard limits on how much exposure they can retain — especially in volatile segments like motor insurance, trade credit, and infrastructure cover.

The solution: Reinsurance must be repositioned as a frontline enabler of growth, not just a backend safeguard. Insurers need to build strong relationships with international reinsurers and demonstrate underwriting discipline to access capacity at reasonable prices.

FUTURE OUTLOOK

Short-to-Medium Term (1-5 years)

• Market growth accelerates. The African insurance market is projected to grow from $98.5billionin2025to$166.1 billion by 2034, driven by digitalisation, regulatory reforms, and financial inclusion efforts .

• Embedded insurance scales. Partnerships with fintechs, telecoms, and PAYGO companies will continue to drive mass-market adoption. Microinsurance platforms already cover 3.5 million+ people in four countries .

• AI transforms operations. Claims processing times will continue to fall; fraud detection will improve; customer service will become more responsive and personalised .

• Bancassurance deepens. Banks will increasingly treat insurance as a core product, not an add-on. The Uganda model — with bancassurance now contributing over 15% of premium volumes — will spread .

• Investment portfolios remain concentrated in government securities. Unless regulatory changes incentivise long-term investing, insurers will continue to prioritise liquidity and safety over higher-yielding illiquid assets.

Long-Term (5-10 years)

Scenario 1: Formalisation and Growth (Probability: 55%)
Insurance penetration rises toward the global average (7% of GDP) as digital distribution, regulatory reforms, and economic growth expand the market. Life insurance grows faster than non-life, providing long-term capital for infrastructure development. The industry becomes a significant source of domestic investment capital.

Scenario 2: Fintech Disruption (Probability: 25%)
Tech platforms (telcos, fintechs, e-commerce companies) disintermediate traditional insurers, capturing customer relationships and underwriting simple risks. Traditional insurers are relegated to complex, high-touch products (commercial, industrial, reinsurance).

Scenario 3: Climate-Driven Contraction (Probability: 20%)
Rising catastrophe losses make some lines of business unprofitable or uninsurable. Insurers withdraw from high-risk areas. Government-backed schemes replace private coverage. The industry consolidates around the largest, best-capitalised players.

Strategic Risks to Monitor

ASJ CONCLUSION

The African insurance industry is a study in contrasts. It is the world’s least penetrated insurance market — just 3–3.5% of GDP, compared to a global average of 7% . Yet it is also one of the world’s most profitable financial sectors, with Kenyan insurers alone posting a 4.8-fold increase in net profit in 2024 .

The source of that profit is not underwriting. In many African markets, underwriting itself remains in loss — premiums collected do not cover claims and expenses. The profit comes from investment income on the float: the premiums that sit in insurers’ accounts between collection and claims payment, invested in high-yield government securities that pay double-digit returns.

This is the model: sell insurance, invest the premiums, earn the spread.

But the model is changing. Digitalisation, embedded insurance, and microinsurance are expanding the market to millions of previously uninsured Africans. AI is reducing claims processing times and improving fraud detection. Bancassurance is turning bank branches into insurance distribution hubs. Reinsurance is being repositioned as a frontline enabler of growth, not just a backend safeguard.

The challenge is to ensure that growth is sustainable — that underwriting discipline keeps pace with digital distribution, that reinsurance capacity scales with policy volumes, and that trust in insurance is rebuilt through transparent processes and fast claims payment.

The insurer that cracks this code will not just be profitable. It will be the template for African insurance in the twenty-first century — a business that protects households and businesses from risk while generating the long-term capital needed to build the continent’s infrastructure.

Until then, African insurers will continue to collect premiums, invest them in government bonds, and earn the spread. It is not a complex strategy. But in Africa’s high-interest-rate environment, it is highly effective.

FAQ SECTION

1. How do African insurance companies make money?

African insurers generate profit from two primary sources: investment income (returns on premiums invested) and underwriting profit (premiums minus claims and expenses). In many African markets, investment income is the dominant profit driver — Kenyan insurers reported Sh77.44 billion in investment income, far exceeding total industry net profit of Sh47.17 billion .

2. What is the insurance “float” and why does it matter?

The float is the money insurers hold between collecting premiums and paying claims. It belongs to policyholders, but insurers can invest it while holding it. In high-interest-rate environments (common across Africa), the float generates substantial investment income, which becomes a primary source of profit .

3. How profitable is the African insurance industry?

Profitability varies by market, but can be exceptional. Kenyan insurers posted a 4.8-fold increase in net profit to Sh47.2 billion (approximately $350 million) in the first nine months of 2024, driven primarily by a 67.7% rise in investment income . However, underwriting itself remained in loss (Sh1.62 billion), highlighting the reliance on investment returns.

4. What is the size of the African insurance market?

The African insurance market generated approximately $98.5 billion in gross written premiums in 2025 and is projected to reach $166.1 billion by 2034, reflecting an average annual growth rate of 5.79%. Insurance assets across 28 African countries exceed $320 billion. .

5. Why is insurance penetration so low in Africa?

Insurance penetration is approximately 3–3.5% of GDP, half the global average of 7% . Key constraints include low trust in insurers (due to historical slow claims settlement), affordability challenges, limited awareness, and the dominance of informal employment (which lacks employer-sponsored coverage) .

6. What is embedded insurance and why is it growing in Africa?

Embedded insurance is coverage sold through non-insurance platforms — telecoms, fintechs, digital lenders, PAYGO companies — at the point of another transaction . Turaco has insured over 5 million people across Kenya, Uganda, Nigeria, and Ghana through such partnerships. Embedded insurance reduces friction, leverages existing customer trust, and aligns premium collection with existing payment behaviours .

7. How does bancassurance work in Africa?

Bancassurance is the sale of insurance products through bank branches. In Uganda, Bank of Africa Uganda saw bancassurance commissions rise 140% year-on-year, with bancassurance now contributing over 15% of all insurance premium volumes (up from less than 5% five years ago) . Banks benefit from revenue diversification; insurers gain access to trusted distribution channels.

8. What is microinsurance and how does it reach low-income customers?

Microinsurance offers small-ticket policies with low premiums (often GHS 10-50 monthly) and simplified claims. Mobile platforms now reach more than 3.5 million people in Ghana, Kenya, Nigeria, and Uganda, with claims processed in an average of four hours through automated systems . Premiums are often collected via mobile money, eliminating the need for physical branches.

9. How is AI changing African insurance?

AI is reducing claims processing times by up to 50% (Curacel, Nigeria) , increasing fraud detection rates by 35% while halving investigation times (South African insurers) , and powering chatbots like Britam’s “Bella,” which boosted policy sales by more than 40% (Kenya) .

10. What is the role of reinsurance in African insurance?

Reinsurance — insurance for insurers — enables African insurers to write larger risks (e.g., mining, ports, power plants) and protect against catastrophic accumulations (e.g., floods, cyclones) . As digital insurance scales, access to purpose-built reinsurance capacity is becoming a critical constraint; EIRS warns that “digital insurance is scaling faster than the risk frameworks that support it” .

11. Where do African insurers invest their premiums?

In Kenya, insurers have shifted their investment portfolios significantly toward government securities, which now account for 70.9% of total investments (up from less than 50% in 2014) . Term deposits account for another 11.3%. This concentration reflects the high yields and perceived safety of government debt in high-interest-rate environments, but also exposes insurers to sovereign risk.

12. What is the future of African insurance?

The market is projected to grow from $98.5billionto$166.1 billion by 2034, driven by digitalisation, regulatory reforms, and financial inclusion efforts . Embedded and microinsurance models will continue to expand reach. AI will further reduce costs and improve customer experience. The long-term challenge is to shift investment from short-term government securities into long-term infrastructure assets — unlocking the $777 billion institutional pool for development financing

Source: Accra Street Journal

Last Updated on May 26, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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