Room for consolidation in
the insurance sector in Africa

These profit pressures have been a deterrent in developing more sophisticated products for the African consumer.

Focus, instead, tends to be largely centred on products where demand is supported by regulation. For example, in countries where motor vehicle or property (fire) insurance is compulsory, we find that general insurance products are largely focused on these segments.

This has seen some companies focusing more on corporate businesses versus retail as the volumes in corporate allow for greater economies of scale and hence better profitability.

Who are the buyers who will drive consolidation as regulatory support kicks in? As stated previously, we see existing local players as one group of potential buyers. Others include regional and pan-African companies.

Over the last decade we have companies such as Sanlam, Old Mutual, MMI, Hollard and Britam expand outside of their home markets through acquisitions. We have also seen the entry of international insurers including AXA, Allianz and Prudential (UK) and Prudential (US).