Policymakers have warned that persistent low coverage levels are exposing millions of people to climate shocks, disasters and economic losses without adequate protection, on May 4. Insurance penetration across Africa remains at 2.7 per cent, significantly below the global average of about 7 per cent, a gap they described as a growing structural weakness in the continent’s financial resilience. The call was made during the ZEP-RE (PTA Reinsurance Company) annual meetings in Kigali, a regional reinsurer owned by member states of the Common Market for Eastern and Southern Africa (COMESA), where government officials, regulators and industry leaders gathered to reflect on the state of Africa’s insurance sector and its role in strengthening economic resilience. ALSO READ: National insurance strategy expected to expand coverage, build trust Soraya Hakuziyaremye, the Governor of the National Bank of Rwanda (BNR), said the insurance gap goes far beyond statistics, warning that it translates directly into human vulnerability when disasters strike. “We must treat insurance not as a niche financial product, but as a strategic tool for economic resilience, fiscal stability, and inclusive growth. Climate and economic shocks are no longer isolated events but have become a recurring reality shaping livelihoods across the continent,” she said. “These shocks are no longer rare events, they are part of our new normal, affecting households, farmers, businesses, and governments when they are least prepared. When disaster strikes, millions of people are left with nothing between them and destitution. This is the gap we must urgently close through stronger, more inclusive insurance systems,” she added. Africa continues to face increasing climate-related disasters, including floods, droughts and storms, which have repeatedly disrupted livelihoods and reversed development gains in several countries. ALSO READ: Rwanda eyes Africa Re partnership to double insurance coverage by 2035 Hakuziyaremye highlighted that Rwanda is one of the countries deliberately integrating insurance into its long-term development strategy through a 10-year national insurance roadmap, which prioritises digital transformation, risk pooling, customer-centred product design and climate-related financing mechanisms. According to Hope Murera, the Managing Director of ZEP-RE, Africa’s response to disasters has too often followed a costly cycle where governments step in to rebuild infrastructure, restore services and support recovery, while long-term debt accumulates in the aftermath. “Across our continent, when disasters happen, governments step in to rebuild roads and restore hospitals. Farmers try to recover from losses, but in many cases, this recovery comes at the cost of expensive debt that remains long after the disaster has passed,” she said. She noted that the most affected groups, smallholder farmers, small businesses, women and youth, remain largely outside formal protection systems, a gap she said the insurance industry must urgently address. Murera warned that climate-related risks are becoming more frequent and severe, arguing that insurance must play a stronger role in absorbing shocks and protecting economies. “Insurance should play a stronger role in capital markets by absorbing shocks and de-risking economies. Yet penetration remains low, and access is still fragmented and unaffordable in many parts of the continent,” she said. Innovation takes shape Murera pointed to the Horn of Africa as an example where innovation is beginning to reshape risk protection, particularly through index-based livestock insurance supported by development partners. “In the Horn of Africa, pastoralist communities once had no protection when drought struck. Today, through index-based insurance, they can receive payouts even before the full impact of drought is felt, not as aid, but as policyholders,” she explained. Murera emphasised that such innovations are only possible through partnerships between governments, regulators, insurers and development institutions. According to Yussuf Murangwa, the Minister of Finance and Economic Planning, Africa’s insurance gap reflects a deeper structural challenge in how risk is understood, distributed and financed across the continent. He noted that while large segments of the population, particularly smallholder farmers, informal workers and small businesses, remain outside formal risk protection systems, the issue is not that they are uninsurable, but that they are still unreached by existing financial systems. “This gap represents both a vulnerability and an opportunity for the insurance sector. The real distinction lies between what is uninsurable and what is simply unreached. This difference will shape the future of Africa’s insurance market,” he said. “For the insurance industry to thrive, governments must create enabling frameworks, but the industry itself must step up on innovation, distribution and reaching the people currently excluded.”
