CHAMPIONS Insurance will, in partnership with Doves Funeral Assurance, offer funeral cover as an extension of its comprehensive insurance cover.
Champions Insurance marketing executive Tapiwa Kahiya said the product would be launched sometime next month.
“We are launching this product as we adapt to the changing needs of our clients,” Kahiya said. “This product is available to our clients on comprehensive cover as well as our clients on third party insurance cover with a small additional fee.”
He said in the event that clients and those travelling with them covered under this product were involved in a fatal accident, funeral services would be provided by Doves. Kahiya said a partnership with Zimpost which sees the parastatal selling Champion Insurance products through their branches countrywide has ensured convenience for their clients and has spurred a 120% growth in business.
He added the product had helped the company stay afloat in an environment of serious liquidity constraints.
The increasing numbers of touts, however, remains a major challenge, Kahiya noted. He said the touts mislead clients giving the wrong information which led to problems when clients made claims.
Kahiya said their Legal Aid insurance product, which covers their clients’ legal fees to enforce their rights or defend themselves in the event of litigation, has also done well on the market.
He said the insurance company would launch the Insure Scratch and Win promotion where one is eligible by paying US$75 for any of their products or the full annual premium. Kahiya said clients would receive a scratch cards which will receive an instant prize and be in line for the grand draw.
Champions Insurance Company (Pvt) Ltd is a short-term insurance company offering a wide range of short-term products both for individual and corporate clients. It started operating in November 2003.
Yet several decades hence its move into African insurance could prove to be highly significant. Tidjane Thiam, the Pru’s Ivory Coast-born chief executive, has been forecasting great things for the continent.
The Pru is not alone among the world’s biggest insurers – and financial services companies more widely – to have avoided Africa until recently. Even relative to the region’s low economic output, its insurance industry is undeveloped.
Excluding relatively well-developed South Africa, the sub-Saharan region accounts for a mere 0.2 per cent of the premiums written by the global insurance industry, according to data from Swiss Re. This compares with a more than 1 per cent contribution to global gross domestic product.
In spite of the clear potential for the industry’s expansion into a region that is home to one in nine of the world’s citizens, however, insurers need to tread with caution.
The countries that comprise sub-Saharan Africa are highly diverse, each with its own batch of problems as well as opportunities.
“If you think Africa is one single market you will fail,” says Philip Broadley, finance director at Old Mutual, the FTSE 100 life and savings group. With a base in South Africa, it has set aside $550m to fund acquisitions further north.
Even so, there are some common African themes. A plethora of local companies keeps many of the highly-fragmented markets competitive in spite of the lack of big global insurers. This puts downward pressure on premium rates. The regulatory environment is far from ideal. “It’s often not particularly onerous, but it can be opaque and under-developed,” says Andrew Kuper, founder of the microfinance fund LeapFrog, which has invested in insurers in countries including Nigeria, Tanzania and Uganda. Barriers to expansion include weak infrastructure and governance problems.
Such difficulties apply to companies of all sectors operating in sub-Saharan Africa. The insurance industry has developed more slowly than the region’s wider economy.
In emerging markets generally, premiums written by insurers have tended to outstrip economic growth in recent years. In sub-Saharan Africa, however, they have just kept pace with gross domestic product.
The volume of premiums written by non-life insurers in sub-Saharan Africa rose by about 7 per cent, on average annually, between 2000 and 2011, according to the Swiss Re data.
The life insurance industry has not done much better, with a 7.5 per cent rise in premiums. Indeed, more than two-thirds of the premiums written across the continent are accounted for by non-life insurance, a considerably higher share than in other emerging markets.
This is in large part because of demand for insurance coverage from the crucial energy sector in countries such as Nigeria and Angola. More than half of the region’s GDP is generated by oil-exporting countries.
For now, demand for non-life cover excluding the energy sector is driven mainly by compulsion, including the requirement for third-party liability motor insurance in big markets such as Kenya. “The less developed the market, the more concentrated it would be on compulsory non-life purchases,” says Carlos Wong-Fupuy, analyst at specialist rating agency AM Best.
Given the number of people across the continent who live at or below the bread line, widespread poverty clearly remains a big obstacle to the development of personal insurance.
Yet it would be a mistake to think insurers are concentrating their efforts on the “middle class”. Nine out of ten of the customers of the Ghanaian insurer that Prudential is buying earn less than $10 a day. A fifth live on less than $2.50 a day.
Mr Kuper takes issue with the argument that individuals on such low incomes should have no desire to buy insurance. “If you’re on a low income you lie awake at night worrying you’re going to lose everything,” he says.
Customers of Express Life pay as little as the equivalent of 70 US cents a month for its offerings. These are often sold via mobile phones and include health and life insurance, funeral cover and savings products.
Frank O’Neill, Swiss Re’s managing director for Africa and the Middle East, is upbeat about the industry’s prospects in the region.
“There are very few truly pan-African insurance companies – but in three or five years’ time, I think that will change,” he says.
Mr Thiam of the Pru puts it in a longer-term context. “Today, Asia is good news for all of us. Tomorrow, Africa will be good news for all of us.”