Jeph Gwatipedza, Chief Operating Officer, Zep /PTA Reinsurance Company
The Southern African reinsurance market, like many others across the continent, has faced its fair share of challenges in recent years.
From significant losses to evolving risks, the industry continues to navigate a complex landscape. As we near the end of the year, thoughts naturally turn to renewals, innovation, and how to address persistent challenges like skills shortages and the need for greater market penetration.
A Challenging yet promising landscape – 2024 has been a year of considerable losses for the insurance and reinsurance markets in Southern Africa. Cat losses – flood and cyclone Insurance losses alone have reached between $150 million and $200 million USD, while the associated economic losses are estimated to be five to ten times higher. This underscores the significant gap between insured and economic losses, a critical issue for the region.
Despite these challenges, there are promising developments. The market has seen steady efforts to foster innovation and expand its offerings. Products such as parametric insurance are gaining traction, especially in agriculture, and there is growing interest in addressing emerging risks like cyber threats. These advancements have the potential to reshape the reinsurance landscape, making it more resilient and inclusive.
Closing the skills gap – One of the most pressing issues in the reinsurance industry is the shortage of skilled professionals. While progress has been made, the sector continues to lose its talent to international markets. Agronomists and other specialists are often drawn to opportunities in Europe and beyond, creating a gap that must be addressed to support the industry’s growth.
At ZepRe, we recognize the importance of building a robust talent pipeline. Our Zep Re Academy has been a cornerstone of this effort, training over 22,000 insurance professionals in the past five years. During the COVID-19 pandemic, the Academy expanded its reach by offering online programs, ensuring that education and professional development could continue uninterrupted.
This commitment to training is mirrored by other institutions across Africa. Kenya’s College of Insurance, Swiss Re, and numerous other players are investing heavily in skill-building initiatives. In addition, partnerships with academic institutions like UNISA help create pathways for young professionals to enter and thrive in the insurance and reinsurance sectors.
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Focus on specialised fields – To build a resilient future, we must focus on training professionals in specialised fields like parametric insurance, agriculture insurance, and emerging risks such as cyber threats. These areas are pivotal for the continent’s economic development.
Agriculture, for instance, contributes at least 20% of Africa’s GDP and is a major source of employment. However, its share of insurance premiums remains disproportionately low. Products tailored to the unique risks in agriculture, such as drought or pest outbreaks, are essential to bridge this gap. Training professionals to design and manage these products is a critical step forward.
The Role of microinsurance – Microinsurance offers an opportunity to increase insurance penetration in underserved communities. This requires innovative solutions, including financialized and parametric products, which can provide cost-effective coverage to populations that have traditionally been excluded from the market. Developing these products and training professionals to implement them will be vital for the growth of the industry.
The reinsurance industry in Africa stands at a crossroads. While challenges like skills shortages and underinsurance persist, the ongoing efforts to address these issues are cause for optimism. As we look to the future, the focus must remain on fostering innovation, building capacity, and investing in the next generation of insurance professionals.
With the growing interest in training, the development of specialized products, and the rise of initiatives like the Zep Re Academy, the foundations are being laid for a more robust and inclusive industry. The upcoming events, such as OASAI in Kampala, provide an excellent platform for stakeholders to collaborate and chart a path forward.
The journey ahead is challenging but full of opportunities. By working together, the reinsurance community can overcome its hurdles and contribute meaningfully to Africa’s economic resilience and growth.