Among the most influential demographic groups driving this change is the millennials generation, born between 1982 and 1994. According to market research firm, IMARC Group, the African insurance industry is expected to grow by 6.3% between 2024 and 2032, after reaching $87.4bn by 2023.
“The millennials have a big role to play in Africa’s insurance growth, as they begin to build families and acquire property,” says Mulenga Kashiwa, technical underwriting senior manager at Hollard International.
He explains, “Millennials in Africa are now in their 30s to early 40s, a phase often associated with significant life changes such as starting families, buying property, and planning for the future. These milestones naturally lead to a heightened need for insurance products, including health, life, and property insurance.
“Unlike previous generations, the millennials have a greater appreciation of the role of insurance in securing their financial future and protecting their assets. However, the trend has been that they are demanding more from insurers including flexibility in product design and premiums aligned with their specific financial needs,” says Kashiwa.
According to Hollard International, affordability and a lack of tailored insurance products that meet the unique needs of this generation has led to a significant gap in insurance penetration from this generation.
The South African market surpasses its sub-Saharan counterparts in insurance bought, with an expectation to hit a gross written premium of $82.07bn this year, mainly driven by life insurances, which are projected to reach a market volume of $52.59bn the same year, according to Statista. The capacity for growth in potential is great in other countries in sub-Saharan Africa.
The Association for Savings and Investment South Africa (ASISA) 2022 Gap Study indicates that individuals aged between 30 and 39 are often underinsured by approximately R1.4m. This indicates a need for the right products, pricing and awareness campaigns, and similar trends can be reproduced across the continent as well.
Kashiwa says, “We are increasingly finding that millennials, with their diverse lifestyles and varied risk exposures, require more flexible and responsive insurance solutions.
"For instance, motor-insurance products that once assumed consistent usage patterns now need to adapt to varied usage scenarios, such as weekend-only driving or reduced weekday commutes, especially given the realities of working from home and hybrid work models. Pay-as-you-use models and other innovative solutions can better serve the new realities of this market segment.
“To effectively meet the needs of millennials to tap into the potential growth of the insurance industry in Africa, the insurance industry needs to evolve and leverage data and technology to inform product design and offering for the different market segments to meet their specific demands.
"Companies that will lead in insurance are those that are investing in data mining and analytics to better understand customer behaviour and preferences, and those are the companies that will tap into the growth prospects presented by millennials.”
Kashiwa argues that, by building robust data analytics capabilities, insurers can redesign products to be more aligned with the actual needs of their customers rather than pushing generic solutions.
“Improving data quality and addressing the asymmetry between insurers and the public remains crucial. We have seen how industries such as ride-hailing services like Uber have excelled in understanding consumer patterns and preferences, and the insurance industry can learn from these examples to enhance its customer insights and product offerings for the industry’s varied market segments,” he says.
“While we cannot use the same insurance product designs and models in Zambia as we would in South Africa, Namibia, Mozambique, or Kenya because of different levels of insurance penetration, we can optimise data to effectively become more responsive to customer needs to and expand the penetration of insurance products across the continent,” argues Kashiwa.
“As insurance has an important role to play in creating better futures, the insurance industry needs to focus on creating innovative, flexible and affordable products that can bridge the gaps that we are seeing, to protect our economies, fully unlock growth prospects of the insurance industry across the continent and contribute towards economic stability and sustainability to create better futures for the millions of people across the continent who remain uninsured, and in some instances, under-insured,” Kashiwa said.
