Kampala, Uganda — Africa’s reinsurance market has for decades been dominated by global giants such as Swiss Re, Munich Re, and the syndicates of Lloyd’s. While these firms bring deep expertise and capital, their dominance has left local insurers struggling to grow.
Africa, which accounts for just 1.5% of global premiums, has the highest number of reinsurers per continent, with 51 entities by the end of 2023. By comparison, the American and European continents, with 39 and 26 reinsurers respectively, underwrite 40.2% and 43.4% of global reinsurance premiums.
Reinsurers on the continent operate in a harsh socio-economic environment marked by inflation, political instability, increased competition and the depreciation of local currencies against the US dollar.
Amidst low insurance penetration, averaging 3% compared with 6.3% globally, African reinsurers face numerous structural challenges: limited capital, fragmented regulation, and insufficient capacity to underwrite large, high-value projects such as oil and gas ventures, marine and cargo, aviation operations, fire and engineering projects.
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The gross premiums totalled $5.7 billion, down slightly from 2022. Non-life premiums fell 4.3%, while life insurance rose nearly 20%. South Africa leads with $2.05 billion in premiums, followed by Nigeria, North Africa, and Kenya, according to Atlas Magazine.
As a result, foreign companies continue to absorb the lion’s share of premiums, leaving domestic players to compete for smaller, less lucrative segments.
Analysts estimate such foreign reinsurers capture between 70% and 80% of Africa’s premiums — a figure that has barely shifted even as economies across the continent expand and demand for insurance grows.
“Most of the premiums collected here end up being ceded abroad. That money is then invested in Europe, the U.S., or Asia, supporting growth in those regions,” Jonas Mushosho, the CEO of AfrexInsure, an insurance affiliate of Afreximbank told The Independent in an interview.
“Meanwhile, when we need capital for our own development, we are forced to borrow from those same regions, often at high interest rates.”
Mushosho said large projects, such as hydropower stations and oil ventures, have traditionally ceded most premiums abroad, inflating borrowing costs and reducing the competitiveness of African goods.
Innovation driven by necessity
In response, African reinsurers and regulators are exploring new ways to retain premiums and expand their footprint.
Launched in 2022, AfrexInsure has sought to reduce the outflow by offering specialty insurance for trade and investments.
AfrexInsure has introduced a model under which a syndicate of leading Pan-African insurers has been established to share risk.
“Each member takes a portion, and only the excess–what we truly cannot retain–gets placed abroad,” according to Mushosho. He says since the syndication was implemented last year, 97% of all premiums generated were retained within pan-African insurers and reinsurers.
“This model is not about competition among African insurers,” he said.
Other players positioned to grow include ZEP-RE, Kenya Reinsurance Corporation, Continental Re, and Africa Re. Most hope to leverage the African Continental Free Trade Area (AfCFTA) which became operational in 2019 and other innovations. The AfCFTA seeks to create a single market for goods and services across 54 countries, with 1.4 billion people and a combined GDP of $3.4 trillion.
Africa Re, founded in Ghana in 1976 to retain premiums on the continent, has built a diversified pan-African portfolio with gross premiums exceeding $1.2 billion. The company focuses on oil, infrastructure, and facultative business to anchor premiums locally.
It is also leading the African Reinsurance and Insurance Blockchain Initiative (ARIBI), which aims to streamline claims management, reduce delays, and improve transparency.
ZEP-RE, a regional reinsurer mandated to promote trade and integration within the Common Market for Eastern and Southern Africa (COMESA), benefitting from the trading bloc’s compulsory re-insurance cessions, has partnered with Afreximbank to launch the Trans-Africa Bond Alliance (TABA).
ZEP-RE CEO, Hope Murera, says Africa’s 110 borders and 16 landlocked nations often make transport costs exceed the value of the goods being moved but TABA’s single transit bond could cover cargo from Cape Town to Cairo.
ZEP-RE is also collaborating with the World Bank to implement drought insurance in the Horn of Africa. Since 2022, Ethiopia, Kenya, Somalia, and Djibouti have participated in the $360.5 million De-Risking, Inclusion and Value Enhancement (DRIVE) project of the World Bank targeting pastoralists. The scheme is under discussion for expansion to Tanzania, Uganda, and the Sahel.
“What this initiative has shown is that, even though Kenya, Ethiopia, Somalia, and Djibouti are not yet harmonised (in terms of insurance regulation), we have been able to pool capacity to cover risks across all four countries,” Murera said.
ZEP-RE is also investing in national reinsurers, including Uganda Re, and has acquired 56% of ACRE Africa, a crop insurer serving nearly 700,000 farmers across Zambia, Kenya, Zimbabwe, and Uganda. She said ZEP-RE plans to move into medical, accident, and life products.
“We are looking at all areas that will help us grow the pie,” Murera says.
Another player, Kenya Reinsurance Corporation, commonly known as Kenya Re, is working to retain premiums across Africa while attracting international business. Early this year, Kenya Re luanched a dedicated international life reinsurance unit serving Africa, the Middle East, and Asia. This marks a shift from its decades-long focus on general reinsurance.
Managing Director, Hillary Wachinga, said the company also plans a subsidiary in Tanzania and a liaison office in India, returning to markets it left three years ago. It is also exploring South America.
“There is growth potential in international life insurance markets,” Wachinga says. “We are positioning Kenya Re to compete where life reinsurance is rapidly evolving.”
With 60% government ownership, Kenya Re operates in more than 80 markets, with subsidiaries in Côte d’Ivoire, Zambia, and Uganda.
Meanwhile, Continental Re, Africa’s largest privately-owned reinsurer, operating in more than 50 countries with client centres in Kenya, Nigeria, Botswana, Cameroon, Côte d’Ivoire, and Tunisia, is eying expansion in the Horn of Africa.
CEO Lawrence Nazare told The Africa Report that East Africa presents the “brightest growth outlook,” citing the Democratic Republic of the Congo as part of a “strong, harmonised reinsurance market.”
Regulators Balance sovereignty and integration
Regulators, too, are moving to support retention through better regulation. In Uganda, an insurer cannot cede more than 95% of a risk without regulatory approval, Benard Obel, the director of supervision at the Insurance Regulatory Authority (IRA) of Uganda, told The Independent in email.
The insurance laws also require insurers to prioritise domestic players with minimum cessions: 15% to Uganda Re, 10% to ZEP-RE, and 5% to Africa Re. Still insurers in Uganda cede about Shs 35-40 billion ($10 million-$11.4million) annually to foreign reinsurers.
The IRA has now facilitated local insurance consortia to cover Marine cargo in collaboration with the Uganda Revenue Authority (URA). An Oil and Gas Insurance Consortium has also been formed.
Similar mechanisms operate in Senegal and across the 14-member Conférence Interafricaine des Marchés d’Assurance (CIMA) zone, where compulsory cessions benefit the Reinsurance Company of Member States (CICA-Re).
East African regulators are collaborating through the East African Insurance Supervisors’ Association (EAISA), to harmonise policies and boost local premium retention.
“We’ve developed a common insurance policy for the region and a model insurance law to provide a standardised legal framework,” said Godfrey Kiptum, CEO of Kenya’s Insurance Regulatory Authority.
EAISA is also supporting cross-border facilities, such as the COMESA Yellow Card and the COMESA Regional Customs Transit Guarantee (RCTG-Carnet), which reduce border delays and simplify transit across the region. The EAC bloc is also piloting a single customs bond to further streamline cargo movement.
In West Africa, the West African Insurance Supervisors Association (WISA) was launched in 2015 but collaboration has lagged.
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“Trust, capacity, and political sovereignty remain obstacles,” says Alfred Ajuyah Omeresan, director at Nigeria’s National Insurance Commission.
Omeresan says institutions such as Afreximbank and the African Development Bank should provide funding, training, and technical assistance to help regulators manage more integrated markets.
In Southern Africa, the Southern African Development Community’s progress on regulatory harmonisation has also been slow while North Africa remains characterised by fragmented regulatory policies. Despite shared language and cultural ties, countries like Morocco, Algeria, and Tunisia maintain distinct national policies with limited integration. Political and economic differences have historically hindered the formation of a unified Maghreb insurance market.
These regional differences highlight a tension between the desire for integration and the practical realities of economic disparity and political sovereignty, which, if not resolved faster, could derail insurance and reinsurers from reaping the benefits of AfCFTA.
A market poised for growth
Patty Karuaihe-Martin, immediate past president of the African Insurance Organisation, says Africa’s re-insurance market is entering a “boom period” driven by economic expansion, infrastructure development, a growing working-age population, increased awareness of insurance benefits, regulatory reforms, and demand for micro insurance, climate change and technological advancement.
“We need to understand what is happening in the market,” she said, “harmonisation strategies and pilot projects to retain premiums on the continent should be the next crucial steps as the industry approaches a boom period.”
Mourice Omogola, former CEO of Minet Uganda, says partnership with foreign reinsurance firms are critical for insurers to balance dollar availability.
He adds that the continent’s reinsurers need to pursue strong ratings from agencies such as A.M. Best, S&P Global, or Moody’s to signal their potential to meet their long-term obligations. This, he said, strengthens trust and credibility to seal big businesses.
Read the original article on Independent (Kampala).
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