Everybody has to contend with life’s hazards with all their attendant financial implications. For example, the death of the head of a family can deprive close relatives of an income. Insurance is designed to offer protection against these types of risks, however the sector is struggling to take off in Sub-Saharan Africa.
There are a number of reasons for this. First, low mean individual incomes: before paying over insurance premiums, people first have to eat and put a roof over their heads. These priorities tend to make such outlays look like “extravagant” expenditure. Many people simply view mandatory insurance as additional taxes and this colours their perception of insurers in general. This is in addition to the low proportion of Sub-Saharan African households with bank accounts and the strength and popularity of traditional solidarity networks.
Despite these obstacles, insurance still has huge development potential in Africa both in the individual and business sector as borne out by the Continent’s economic and demographic momentum. However, private market players need to adapt their offering and distribution channels to African’s needs and contribution capabilities.