Interview: Habib Ben Hassine
Can you describe the factors driving regional sector growth, and how insurers can leverage them?
HABIB BEN HASSINE: The African insurance market is developing. In 2017 insurance premiums on the continent grew by 12.3% to reach €59.2bn, whereas global growth averaged 4%. However, there are significant disparities behind this figure: South Africa accounts for over 72% of premiums on the continent, while the regional penetration rate – excluding South Africa, where the rate is 13% – does not exceed 3%, compared to a global rate of 6.3%.
African macroeconomic dynamics are linked with demographic changes, the growth of the middle class and rapid urbanisation throughout the continent. Under these circumstances long-term investments in construction, education, transport, agriculture and health will increase. African insurers must seek to capture the growth potential offered by these opportunities, positioning themselves as guarantors of trust that are able to support businesses and individuals in these changes.
How can digitalisation help insurance companies to improve the reach and quality of their services?
BEN HASSINE: The main problem faced by insurers is distribution. Digitalisation can help solve it by reaching out to Africans and offering services that correspond to their needs and means. Stakeholder collaboration will be essential to removing regulatory hurdles and resolving payment safety issues related to the use of digital tools. Digitalisation can benefit insurers in other ways. For instance, the digitalisation of internal operations can help optimise deadlines and mitigate the risk of fraud through the digitisation of contract underwriting and management claims.
Digitalisation also affects the management of customer relationships. The wider shift towards digital has increased customer expectations. Indeed, having become accustomed to online purchases and payments, document dematerialisation, interactive communication and increased recourse to social networks, Tunisians expect their insurers to provide equivalent services. Therefore, the key issue for insurers is to adapt their distribution tools to new ways of consumption. Insurance companies embracing these changes could significantly improve their services. The continuity of a digital customer relationship offers the possibility to improve customer performance tracking, mitigating default risks and rewarding loyalty. Overall, digitalisation can help to increase revenues and streamline costs.
What can be done to grow insurance premiums?
BEN HASSINE: Domestic insurance has averaged 8% growth in the last few years, compared to GDP growth of 1.4%. The national penetration rate also rose from 1.8% in 2011 to 2.2% in 2017, though this remains low compared to the world average. Lastly, density – or average premium per capita – improved from TD110 ($38.21) in 2011 to TD182 ($63.21) in 2017. The sector is actively supporting national economic development and contributes to the financing of long-term investments and savings mobilisation. In fact, insurers reinvested over TD5.4bn ($1.9bn) in 2018, which is a good sign for the economy.
Insurance density is dependent on product innovation and distribution networks, as well as tax and social incentives. Creating an incentive framework, such as the growth of employee savings through insurance contracts signed by their employers, will support the development of life insurance and greater savings mobilisation. Moreover, the sector can play a major role in reforming pension plans and help to ease the growing burden of social insurance funds. Specifically, life insurance has tremendous growth potential in Tunisia, as the segment now accounts for 23% of local market turnover, compared to 58% in Europe, 65% in Asia and 80% in South Africa.
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