Writer Ian Armitage
Project manager Nick Norris
Demand for insurance and reinsurance continues to grow globally, but nowhere as quickly as in Africa.
Africa has been the second-fastest growing economy in the world, with GDP increasing on an average of five percent a year.
The middle class ranks are swelling, driving demand for goods and services.
Africa is also resident to the fastest growing youth demography in the world, well-educated and better informed; a growth opportunity waiting to be tapped.
Demand for insurance products, new or otherwise, is building and should balloon.
There is immense potential.
One company that is very much aware of this is ZEP-RE, a COMESA institution created 20 years with the sole aim of promoting insurance trade in Africa.
"It is an exciting time in Africa and we feel we are in the right place at the right time," says Hope Murera, the firm's general manager.
ZEP-RE was set up in 1990 by the member states of COMESA (common market for eastern and southern Africa) and started reinsurance underwriting on January 1, 2003 under the name of PTA Re, with its headquarters in Nairobi.
With an authorised capital of $100 million and a market that stretches from Djibouti to Senegal and Libya to South Africa, the firm had the necessary tools for success and has enjoyed significant growth in size, coverage and turnover.
"We have seen our client markets grow between 30 and 40 percent year-on-year for the last five years or so and we are on target to writing $100 million by the end of this year," says Ms Murera. "Our major growth areas are still our traditional core markets and we see impressive growth in East Africa and the greater COMESA region where we operate in. We have also made inroads into new markets in Asia and are currently among the top reinsurers in the Nepalese market".
Last year we opened an office in Zimbabwe and it serves Botswana, Swaziland and South Africa - Entry into Zimbabwe was also designed to boost the country's reinsurance capacity", Murera explains."
ZEP-RE provides reinsurance capacity in life and short-term insurance products such as marine, property, engineering, liabilities, motor and aviation; and accident and health.
"We see great opportunities in infrastructure, energy, oil, gas, engineering and life all over Africa, a continent that is home to some of the world's fastest growing economies, many of which are new democracies bouncing back from years of war, military rule or economic mismanagement".
"Insurance and reinsurance follows economic development; there is no magic about it."
Reinsurance is where insurers transfer portions of risk portfolios to other parties by some form of agreement in order to reduce the likelihood of having to pay a large obligation resulting from claims.
"Our mission all over Africa is to provide first class security and services to our clients."
In order to achieve its goals – and for the industry to register faster growth – ZEP-Re has challenged insurance companies to invest more in training employees.
One of the objectives at the formation of Zep- Re was to provide Reinsurance Training and manpower development in the region. The Company has a dedicated training department committed to developing capacity within the region.
"Our mission is to provide quality training solutions geared at enabling the whole industry to operate optimally; we are here to encourage success," Murera says. "Through our training publications, workshops and seminars we share with our clients the knowledge of business, risk management and new practices that are being adopted by leading industry players. We trust that our clients value our service and commitment."
Training is just one challenge. Others include stiff competition, unsustainable price cutting and little product differentiation.
Low levels of awareness of the importance of insurance among potential consumers of insurance also plagues the industry, as well as low disposable incomes and the inability to purchase insurance, which in most cases is not regarded as a necessity.
Only about seven percent of Kenyans, for instance, have one form of insurance or another.
Climate change is another major problem and leaves insurance providers exposed. National disasters are growing year by year especially floods in this region of the world.
"Insurance is absolutely vital," says Murera. "It plays a key role in supporting economic growth and development, providing medical and other health benefits, providing adequate retirement incomes in the face of global ageing, and finally driving improvements in risk management, related to the development of new technology."
What insurance offers is protection. It exists for one reason: to help prevent losses.
"ZEP-RE strives to provide its clients with a little more than the traditional reinsurers used to offer their clients in the past," says Murera. "We've adopted a holistic approach including best practices in risk management training in underwriting and claims."
Central to ZEP-RE's growth plan is the idea that "Africa must develop Africa".
"We believe that Africa must develop Africa. Our vision is to be able to provide support for the African market so that premiums generated in Africa, will remain in Africa.
"The demands of the market place in terms of products and services are changing by the day and providers have to be innovative to meet the evolving and increasingly more sophisticated insurance customer needs. Because insurance penetration has traditionally been very low there is an opportunity for a much bigger slice of the cake. The challenge is bringing the right products to the right people, using the right channels.
"And although we have been growing well, we have not scratched the surface just yet. We are challenged on a daily basis to grow our skills. We are challenged to make sure we are able to offer the right support and capacity. It is exciting."
The company is currently rated "B+" by AM Best and enjoys a unique position with diverse mix of shareholders who include countries of the region, public and private sector companies and international development finance institutions. Currently discussions are underway to bring on board other DFIS to augment the investor base of the Company.
ZEP-RE runs five offices in Africa, including the head office in Nairobi and regional offices in Douala, Harare, Khartoum, and Lusaka. Plans are underway to open other offices in the region.
To learn more visit www.zep-re.com.
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