According to the Africa Insurance Pulse, on “The digitization Africa’s Insurance markets”, launched by the Africa Insurance Organisation (AIO), digitization will enhance the appeal and affordability of risk transfer products in Africa.

Underwriting and risks management will benefit from improved access to data and analytics. At the same time, technology will help streamline the insurance value chain and enhance the efficiency of administrative processes. Ultimately, digitization is hoped to boost awareness and demand for insurance solutions, eventually translating into higher insurance penetration in Africa.

These are some of the key findings of this year’s edition focused on the digitization of Africa’s insurance markets. Faber Consulting produced this research on behalf of the AIO for the fifth year. This edition has been exclusively sponsored by Africa Re, the leading pan-African reinsurance company and the largest reinsurer in Africa.

Jean Baptiste Ntukamazina, Secretary General of AIO, said: “During the COVID-19 crisis, digitization in Africa, as in other economies, has demonstrated its benefits. While regulators and policymakers recognized the systemic nature of the insurance industry, the industry demonstrated its ability to continue to provide its services to policyholders without any disruption. Ultimately, this will reflect in an acceleration of the application of the new technology across Africa.”

Dr. Corneille Karekezi, Group MD and CEO of Africa Re, stated: “We are seeing pronounced differences in the degree of digitization across African insurance markets and its players. At Africa Re, we are keen to promote, accompany and support the digitization of our core markets. The advanced technology helps insurers to access new client segments, improve their services and differentiate their products to overcome the focus on pricing that has eroded many of our markets in the past years.”

“The Africa Insurance Pulse is based on a combination of in-depth market research and valuable insights from senior insurance executives operating across Africa,” commented Henner Alms, Chairman and Partner at Faber Consulting. “The study found that currently approximately 5% of insurance premiums are already generated digitally. In the long term, this share could rise to 20-50% of premiums.”

In Africa’s frontier markets, the introduction of digital technology contributes to advance administrative processes and improve risk management. In more advanced markets, such as Kenya, Nigeria or Ghana, digital products are already sold via mobile platforms and the technology helps to finally curb down on the sales of fraudulent motor policies.

Personal lines are expected to be 2 digitized first, followed later by commercial lines and then specialty lines. In the long run, executives expect that most insurance products will be distributed digitally. Africa’s insurers and reinsurers are looking at a variety of digitalization strategies to strengthening their franchise and increase the insurance penetration too.

The large, global players follow a multipronged digitalization strategy whereby they digitize their own processes, test new avenues with internal labs, collaborate or invest in technology partners. The smaller players, by contrast, frequently pursue a sequential approach to digitization to improve the different processes within their own value chain before engaging in a partnership with InsurTech companies or digital platforms to broaden their access to new customers.

The main barriers to digitization are lack of financial literacy of policyholders, limited insurance awareness, modest income, low levels of trust and lack of access to online products. By contrast, the main factors promoting digitization are an increasing level of mobile phone penetration, large numbers of young people, a growing middle class and compulsory insurance schemes.

Although there is a strong consensus that digitization will boost insurance sales, insurers are still wary as to when these effects will materialize. Most African insurance executives thus take a cautious approach when investing in the technology, using a sum equivalent of up to 2% of their revenues to drive forward their digitization strategy.

About the African Insurance Organisation

Established in 1972 in Mauritius, the African Insurance Organisation (AIO) is a non-governmental organisation recognised by many African governments. Following the headquarters’ agreement with the Government of Cameroon, the Permanent Secretariat of the AIO was set up in Douala. The AIO pursues the objective of developing a healthy insurance and reinsurance industry in Africa and promoting inter-African co-operation in insurance. Currently, the AIO has 362 members, 342 of them from 47 countries in Africa and 15 associate international members from 9 countries.

Mr. O. S. Thomas

Commissioner for Insurance

National Insurance Commission (NAICOM)

The National Insurance Commission (NAICOM) has signified its intention to digitally transform the insurance in Nigeria via its 24/7 portal in line with growing trends around the world, especially as a fallout of the COVID-19 pandemic on virtual business processes.

Mr. O. S. Thomas, the Commissioner for Insurance, NAICOM, in remarks at a seminar for insurance journalists in Uyo, Akwa Ibom State, said the portal which was in the making  for a period of six years was ready to pilot the Commission and the insurance sector to a new level of market experience in the current digital era.

“We will be looking at the digital world. Part of what we have done so far is the fact that our portal that was on the drawing board for over six years has been fixed. It is taking us from where we are to the next level. We have sensitised the technical people in the industry and they have been going through series of trainings. The next thing we are going to do is to engage the industry with IT guidelines. It is no longer going to be historical reporting.It is not by coincidence that we are having this conference today that we are marking 60th anniversary as a nation. We want to be seen the way we are so we know where to make amends. NAICOM is an agency of the Federal Government  and has the responsibility to make some impact on the economy. We will continue to relish the president’s appreciation of the industry.”

He added that NAICOM is ever ready to provide the needed information to its stakeholders, including the media. “If there is a need for change, let us know and if there is a need for me to explain, I will not hesitate to do that. We have challenges ahead of us but we are determined to overcome those challenges. We try as much as possible to let investors, government and stakeholders into our programmes. The terrain is tough but we are determined to succeed. Nigeria is not by accident the largest economy in Africa. We must take advantage of the population.  There are a lot of things to fast track the process. The digital world will drive regulation“

For many years, the reinsurance markets of sub-Saharan Africa (SSA), though small by global standards, have provided global reinsurers with an opportunity for diversification and profitable revenue growth. However, competition and rising acquisition costs have led to a gradual deterioration in the performance of market participants, reducing the attractiveness of the region to potential new entrants.
In a new Best’s Market Segment Report, “Tough Operating Conditions Present Challenges for Sub-Saharan Reinsurance Markets”, AM Best notes that the operating environments across SSA remain difficult for both domestic and international companies, more recently exacerbated by the COVID-19 pandemic (albeit with varying severity).

Many of the region’s markets face double-digit inflation and local currency depreciation; and for some countries, government instability and corruption have contributed to social unrest and political uncertainty.

Despite these challenges, there remains significant growth potential for the (re)insurance sectors due to the region’s substantial natural resources, a young and growing population, and the gradual development of regulatory regimes.

American Financial Group has reached a deal to unload Lloyd’s insurer Neon for an undisclosed price.

RiverStone Holdings Lt. is the buyer in a transaction that will acquire from AFG GAI Holding Bermuda and its subsidiaries – the legal entities that own Neon. Plans call for closing the deal in the 2020 fourth quarter, pending regulatory approvals and other closing conditions.

The agreement is designed to complete American Financial Group’s exit from the Lloyd’s of London insurance marketplace, a planned move it announced in January 2020.

AFG was only part of Lloyd’s for about 12 years, after it acquired Neon Underwriting Ltd. (formerly Marketform) in 2008 for $75 million. At the time of its announcement to leave Lloyd’s, AFG said that Neon/Marketform hadn’t met profitability objectives since the acquisition. As well, American Financial Group earlier this year began a process to place its Lloyd’s subsidiaries into runoff, including Neon.

“The exit allows us to provide continued focus on our other Specialty P&C businesses and enables us to redeploy capital, increase earnings and returns, and create long-term value for our shareholders,” AFG Co-Chief Executive Officer Carl Lindner III said in prepared remarks.

American Financial Group is an insurance holding company, based in Cincinnati, Ohio. The company booked $70 billion in assets as of June 30, 2020.

By Tom Sims

Pension funds for truckers, teachers and subway workers have lodged lawsuits in the United States against Germany’s Allianz, one of the world’s top asset managers, for failing to safeguard their investments during the coronavirus market meltdown.

Market panic around the virus that resulted in billions in losses earlier this year scarred many investors, but no other top-tier asset manager is facing such a large number of lawsuits in the United States connected to the turbulence.

In March, Allianz was forced to shutter two private hedge funds after severe losses, prompting the wave of litigation the company says is “legally and factually flawed.”

Together, the various suits filed in the U.S. Southern District of New York claim investors lost a total of around $4 billion. The fallout has also prompted questions from the U.S. Securities and Exchange Commission, Allianz has said.

A spokesman for Allianz Global Investors said in a statement to Reuters: “While the losses were disappointing, the allegations made by claimants are legally and factually flawed, and we will defend ourselves vigorously against them.”

The plaintiffs are professional investors who bought funds that “involved risks commensurate with those higher returns,” the spokesman added.

The latest claims against Allianz and its asset management arm Allianz Global Investors last week include one from the pension fund for the operator of New York’s transport system, the Metropolitan Transportation Authority (MTA). It has 70,000 employees and made an initial investment of $200 million.

Similar suits have been filed against Allianz by pension funds for the Teamster labor union, Blue Cross and Blue Shield, and Arkansas teachers. The suits are seeking a jury trial to award damages.

The suits allege that Allianz Global Investors, in its Structured Alpha family of funds, strayed from a strategy of using options to protect against a short-term financial market crash.

The SEC’s inquiry continues and Allianz is cooperating. The SEC did not respond to requests for comment.

Attracting investors with an “all-weather” investing approach, Allianz “bet the house” and “out of greed … sacrificed the hard-earned pension and benefits of the MTA’s workers, who at the time were risking their lives under COVID keeping New York alive,” the MTA’s lawsuit said.

The cases are a second front of litigation for Allianz, one of Europe’s largest insurance companies. The Munich-based company and its competitors face suits for not paying claims related to business closures during the pandemic lockdowns.

The company’s insurance business as a whole has been under pressure as it faces claims for canceled events, and a decline in demand for car and travel insurance. It expects to post the first decline in annual profit in nearly a decade.

At the end of March, Allianz informed investors it was liquidating two funds, as well as an offshore feeder fund. Investors lost 97% on one of the funds, the suits say.

In April, Morningstar downgraded its rating for the remaining funds to negative “because of the failure in risk management protocols and the uncertainty.”

Allianz disputed that rating and in July published an internal report that found that the losses “were not the result of any failure in the portfolio’s investment strategy or risk management processes.”

Mr. Babatunde Fajemirokun

Managing Director/CEO

AIICO Insurance Plc

AIICO Insurance Plc has promised to continue to pursue its commitment to deepen insurance penetration, education and awareness in the country.
Making the pledge during a breakfast meeting with the new executives of the National Association of Insurance and Pension Correspondents (NAIPCO) in Ikeja, Lagos, at the weekend, the Divisional Head, Shared Services, Mr. Olusanjo Shodimu, said the Insurance company is poised has always been at the fore-front of insurance awareness to ensure rapid growth in the sale of insurance policies, promising to continue to work with NAIPCO to propagate the message of insurance.
Shodimu, who represented the Managing Director/CEO, Mr. Babatunde Fajemirokun, said operators in the insurance industry have stepped up their claims paying ability, adding that, hundreds of billions of naira were paid as claims on an annual basis in the last few years, with AIICO being one of the leading underwriters in the area of prompt claims payment.
Speaking on recapitalisation plan of AIICO Insurance Plc, he said, the company, known for its integrity, had previously had International Finance Corporation (IFC) as its investors and now, Leapfrog Investment as its major investor, stating that, the insurer is in the right financial situation to recapitalise before the staggered recapitalisation deadlines of December, 2020 and September, 2021 respectively.
LeapFrog Nigeria Insurance Holdings Limited, he said, had previously  acquired 28.24 per cent stake in the company, while AIICO Bahamas Nigeria Limited now holds 10.59 per cent stake in the insurer, a development that see its capital rose from N6.1 billion to N11.3 billion currently.
Similarly, he said, the insurer has launched its N3.5 billion rights issue, which opened on Wednesday, September 2, 2020 and will run through to Wednesday, October 7, 2020, urging shareholders to subscribe to the offers.
He equally promised that AIICO, known for its efficient service delivery, will continue to improve through adoption of the right Information Technology (IT) to give customers the best insurance experience.
Similarly, the Head, Strategic Marketing & Communications Department, AIICO, Mr. Segun Olalandu, promised that the company will sustain its drives in the area of information dissemination to its investing public, through publicising its claims, improves publicity on its products and services as well as its Corporate Social Responsibility ( CSR), to continue to give back to the society.
AIICO, he said, cannot do this alone, without the support of insurance correspondents as a worthy partner, pledging to always support NAIPCO whenever its service is needed.
Earlier, the new president, NAIPCO, Mr. Chuks Udo Okonta, applauded the insurer for the support they extended to the association in the past, urging the company not to relent, but build on what they have done for NAIPCO by supporting the projects of the current administration.

Okonta, who is also the Publisher, Inspenonline Media, an online platform, said, the theme of his administration is developmental journalism, stating that, this was the reason the new executives had earlier organised a training where the new Excos were trained on the task ahead.
He stressed that such training would be extended to the members too, disclosing that  Thursday, 22nd of October, 2020 has been chosen for the 2020 NAIPCO Training, hence, soliciting the support of AIICO to sponsor the training.
To him, “we want to train ourselves on data analysis and interpretation, such that, insurance journalists can pick up an annual report, analyse the figure therein to better inform the insuring public and shareholders.

“We will also be having trainings on developmental feature writing; research based reporting and human angle reporting.

“Though, insurance Correspondents are currently doing well, but there is always the need to train and retrain to better equip ourselves for the task ahead. So, I can tell you that you will get returns on investment if AIICO can sponsor the training.”
Other projects of the current administration, he mentioned are; 2020 NAIPCO Annual Conference scheduled to hold on the 4th of November 2020, the 6th edition of NAIPCO Journal-The Trumpet, Product, Management and Claims Profiling, amongst others.