Govts urged to support insurance industry

Finance and Economic Planning minister James Musoni has called upon African governments to support the insurance industry grow saying it’s vital in the economy. “In the world full of uncertainties, individuals, businesses and institutions succeed by taking risks. Since many risks can be insured, the insurance industry actively supports successful endeavours, businesses, and institutions in public as well as in the private sector,” he said. He was speaking at the official opening of the African Insurance Organisation (AIO) recently at Kigali Serena Hotel. He suggested to governments to put in place adequate institutional and legal frameworks to support insurance practices and products. He also said there was need for competent regulatory bodies to be instituted to guide and promote the industry. Musoni told the insurers that there was need to open markets to both regional and international skills and expertise. He said that despite highly valuable efforts by AIO, the gap between Africa and the rest of the world remains huge. “If we look at the insurance market, Africa represents only 1 per cent of the world insurance industry, of which South Africa represents 0.8 per cent. As the world insurance market is estimated at $3,000 billion, Africa’s insurance market –outside South Africa is a meager $6 billion,” the minister said. He also added that if we look at the average premium per insurance and per annum, Africa is less than $10, while the US alone is above $2,000. More than half of the insurance premiums are compulsory insurance. Around 40 per cent is motor vehicle premiums. Life insurance, which is recognised as the most profitable, represents only 10 per cent against 60 per cent in advanced countries. Musoni said in Rwanda, total insurance premiums were around $18 million in 2006 that is around 0.3 per cent of the African market. Ends