Wachinga said foreign companies have increasingly entered African markets, identified profitable opportunities and taken advantage of them Kenya Re Group managing director Hillary Wachinga /Handout Kenyan-based reinsurer-Kenya Re has challenged African insurance companies to rethink their business models and find ways of retaining more value locally.
This, as it warns that foreign players continue to benefit from some of the continent’s most profitable insurance opportunities. Kenya Re Group managing director Hillary Wachinga said African insurers need to focus more sharply on profitability and risk management if the continent’s insurance industry is to become more competitive and sustainable. Wachinga said foreign companies have increasingly entered African markets, identified profitable opportunities and taken advantage of them, leaving local players to operate businesses that can be more difficult and less rewarding. “Unfortunately, they come and tell people it is profitable.
They take it to you. Then they leave you with the business,” Wachinga said. He said the challenge should prompt African insurers and other industry players to examine how they can change the economics of insurance and ensure that more value generated by the sector remains within the continent. The Kenya Re chief said the industry needs to collectively examine why insurance has struggled to match the pace of capital growth seen in other financial services, particularly banking. “If we are to look at the compounded aggregate of insurance business, compare this to banking, we discover banking can grow capital faster than insurance,” he said. Wachinga was speaking as the reinsurer outlined plans to bring together insurance companies, brokers, regulators, governments and other players in the insurance ecosystem to discuss ways of improving profitability across the industry. The discussions are expected to focus on areas including agricultural insurance and other insurance lines that have struggled to generate sustainable returns.