• Monday, May 20, 2024
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BusinessDay

Africa joins league of future high priced insurance markets

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 Experts in insurance from Ernest and Young have seen Africa as one of the battlegrounds for serious competition in the near future that offer big prizes – but only if insurers can get it right. Other markets the experts noted include Latin America, Asia, and Eastern Europe.

In a report by the firm, companies that want to lead the way in the insurance industry need to take another look at their strategy and cost effective business models, flexibility of their portfolios and innovation in value adding products.

Therefore, emerging markets, including Africa, are receiving increased attention as future industry investment destinations” – Malcolm Rapson, Insurance sector leader.

The global insurance market it said, is remarkably strong, despite continued fallout from the financial crisis. “Low interest rates coupled with relatively poor investment returns have impeded growth, but demand for insurance products and services remains high.”

According to the company, it will offer its support to keep firms prepared by providing insights into the nuances of markets, as well as global trends putting pressure on the industry. Urging firms to stay nimble amid risk and regulation, the report notes that “Waves of global legislation continue to pressure management and absorb precious resources. Combined with the need to innovate in a highly competitive environment, this is causing some insurers to withdraw from long-standing core markets and product lines.”

However, insurers are adapting by leveraging technology and developing operating models that are compliant with Solvency II, as new business architectures will enable insurers to release better products more quickly and cheaply.

It further urged firms to gain market insight, buttressing that the balance of power is shifting toward the customer, and distribution models are rapidly evolving. “Emerging markets in Latin America, Asia, Africa and Eastern Europe are future battlegrounds that offer big prizes – but only if insurers can get it right.”

Success will be achieved with patience, long-term investment and genuine understanding of local dynamics, the report highlighted.