Blurb
We’re seeing a lot of investment in Africa by China and India on infrastructure projects. Munich
Re can utilise its expertise and presence in these markets to ensure that both reinsurance
markets benefit from the investments, instead of it being one sided.
Headline- “Africa is currently the second fastest-growing insurance market in the world ‘’
Hitesh Kotak, Chief Executive, India, Middle East and Africa, Munich Re speaks about the trends and immense market potential of the African and Middle East markets
How do you see the market developments and broad trends in Africa and Middle
East markets?
In the Middle East, we are seeing increasing efforts by the insurance industries to promote
distribution of insurance and making its benefits available to a growing public at attractive and
commensurate prices. Insurance companies are, together with their reinsurers, striving to
devise new products, new distribution channels and better service. Digitalisation is a strong
support for those developments. As a reinsurer, we add a global perspective to managing risk
and developing markets with a local and regional expertise for our clients.
The important factors for our business are the management of exposure, including the one
from natural hazards and, to an increasing extent, also inflation.
At a time when governments, regulators and policy makers pursue to increase insurance penetration and the contribution of the financial sector to the domestic economies, it is of utmost importance to provide the right covers at the right price.
Africa is currently the second fastest-growing insurance market in the world.
Reinsurance premiums in Sub-Saharan Africa are steadily rising, going twofold between 2008 and 2019.
Over a 10-year period, gross written premiums have increased by nearly 7%, driven exclusively
by the Non-Life business, despite the depreciation of many African currencies against the
dollar.
In 2021, African reinsurance accounted for 6.2% of the total African market, all activities
combined (insurance and reinsurance), posting an increase of 21.3% during the period 2017-
2021.
There is also increasing trends of protectionism with the majority of markets seeking to keep as
much premium as possible within the respective countries. This includes insurance regulators
driving for establishment of regional and / or local reinsurers, taxes levied against foreign
reinsurers.
Which are the segments, African markets need more capacity and are they getting it?
In most African economies, there’s a lot of infrastructure development and this increases
demand for capacity in Engineering (Construction), Bonds and Marine. African markets mostly
look up to large global reinsurers for more quality capacity. The capacity is generally granted,
but not as much as usually requested as most markets would ask for sudden significant
capacity increase at once.
What are the growth segments in the Middle East markets? Are Middle East
re/insurance markets expected to witness larger investment and higher growth in
future?
Our clients rely on Munich Re to provide outstanding quality, security and capacity both in
treaty and in facultative reinsurance. We are conscious that our capacity helps to grow and
develop our clients’ business and contributes to increasing the insurance penetration and
provides the protection for economic activity in the region. Areas where we expect a positive
growth momentum are in personal lines, construction, and also operational covers. The energy
sector is in a state of development while the world is stilly relying on fossil energy to a large extent, the shift to renewable energy and hydrogen as the future new energy source is strong
and increasingly driven by Middle Eastern players.
Which are the segments, ME markets need more capacity and are they getting it?
The Middle East is a dynamically growing and prospering region with major economies being in
a transformation economically and marked through major investment into infrastructure and the
move from fossil-based energy to renewable energies. The (re)insurance of such
transformations as well as the insurance of complex infrastructures requires a lot of expertise
and capacity. Global reinsurers, together with their local partners, are prepared, and already
engaged in supporting the local and regional developments.
In what way, Asia and Africa can cooperate with each other to develop their
re/insurance markets?
Asia and Africa, and the Middle East as the link between the two continents, are an evolving,
dynamic, and growing area. The relevance on a global scale will going to increase
economically and the contribution to global economic value will grow further. This is based on
the growing population, its wealth in know-how, culture, natural resource, and economic
development.
The Middle East is part of this development and will find its role on the global
stage by increasingly contributing its share to the world in the area of energy, trade,
entrepreneurial activity and know how.
The Middle East has the wealth, the human resource,and the energy to diversify its current economic base with a fresh and unloaded basis and the geographic benefit to be centered between other growing areas.
We’re seeing a lot of investment in Africa by China and India on infrastructure projects. Munich
Re can utilise its expertise and presence in these markets to ensure that both reinsurance
markets benefit from the investments, instead of it being one sided.