African insurers urged to develop mass products

African insurers must take advantage of the growing demand to create market responsive products to unlock the mass market, Rwanda's Prime Minister, Anastase Murekezi said Wednesday.

Speaking at the African Trade Insurance agency (ATI)'s 16th annual general meeting in Kigali, Murekezi said the low uptake of insurance is partly due to failure to create mass market products by insurers.

African captains of industries, he said must come on board to significantly increase insurance penetration.

The level of insurance penetration on the continent remains low at 1.5 percent.

Insurance penetration in African remains very low mainly because a majority of Africans who reside in rural areas and are involved in agricultural and informal sector are without any insurance protection, the Rwandan premier said.

Israel Kamuzora, the chairman of the Board of ATI acknowledged the need to come up with products that will cater for the masses, including people engaged in livestock, farming, and small scale businesses.

Rwanda's Finance minister Claver Gatete noted that demand for insurance was likely to raise due to growing middle income class across Africa.

"When there are more assets, there is more demand for insurance. At the same time we have a significant number of people who are still micro in nature, having products that are commensurate with that is very important. That is why we are looking at insurance of assets and at the same time one that addresses perceptions on the African continent as well as the political risks," he said.

George Otieno, the chief executive of ATI mentioned that the traditional ways of coping with losses was fading away giving rise to insurance demand.

ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa.

It covers Political Risk, Surety Bonds, Trade Credit Insurance and Political Violence and Terrorism & Sabotage cover.

As of 2015, ATI has supported over 21.5 billion U.S. dollars in trade and investments across Africa in sectors such as agribusiness, energy, exports, housing, infrastructure manufacturing, mining and telecommunications, according to officials.

It supports banks to protect their balance sheet against payment default risks, allowing them to lend more.

In the past year, the insurer's business in Rwanda has reached over 110 million U.S. dollars mainly on the investment side, according to Otieno.

Rwanda is a founding member of the institution with 8.7 million U.S. dollars in share capital.

ATI has insured transactions worth over 425 million U.S. dollars in the east African country over the last seven years. Endit