Insurance for inclusive and sustainable growth

The report finds that insurance markets in Ghana, Kenya, Nigeria, and Rwanda are underdeveloped, with low penetration and significant 'risk-protection gaps' for households and SMEs. While government-led health insurance has increased overall uptake, private insurance remains focused on large corporate risks and compulsory lines, which often lead to irrational price competition and poor consumer value. The authors argue that the sector's role as an institutional investor is limited by short-term balance sheets and a lack of long-term investment instruments. To unlock the potential of insurance for development, the report proposes six imperatives: proactive policy leadership, a transition to risk-based supervision, driving innovation through better data and regulatory tools, re-engineering compulsory products, improving risk management for SMEs, and incentivising long-term savings to support capital market development.

• There is a substantial risk-protection gap across the four study countries; 51% of adults faced a risk event in the last year, but only 1% used insurance, and over 20% used welfare-reducing strategies like selling assets to cope.
• Insurance penetration remains low compared to the global average of 6.1%, with Kenya (2.6%), Rwanda (1.6%), Ghana (1.1%), and Nigeria (0.3%) lagging behind.
• The insurance sector's role in capital market development is limited by small asset bases (less than USD 10 billion combined in 2016) and a reliance on short-term investments, with assets ranging from 0.77% to 7.7% of GDP.
• High cost structures are a systemic issue, with one-third of insurers across the four countries reporting expense ratios of 80% or higher, which inhibits their ability to innovate or pay claims.
• Compulsory insurance often creates negative market incentives, such as price undercutting and a lack of innovation, and is frequently perceived by consumers as a tax rather than a protective product.
• SME insurance needs are largely unmet because products are typically scaled-down corporate offerings that do not address the specific needs of small businesses, combined with difficult distribution channels.
• Localisation requirements in Ghana and Nigeria, which mandate that local capacity be exhausted before offshoring risk, can introduce market inefficiencies and may sustain non-viable businesses.
• A transition from rules-based to risk-based supervision (RBS) is necessary to improve industry professionalism and ensure that regulatory resources are allocated to the highest-risk insurers.
• Innovation is hindered by a lack of actuarial and underwriting skills, as well as the underutilisation of public datasets, though examples like Kenya's IPRS integration show the potential for efficiency gains.

APA

Thom, M., Hougaard, C., Gray, J., Msulwa, B., Rinehart-Smit, K., & de Waal, J. (2019). Insurance for inclusive and sustainable growth. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/19-10-24-Insurance-for-Growth_KJ-1.pdf

Chicago

Thom, Mia, Christine Hougaard, Jeremy Gray, Baraka Msulwa, Kate Rinehart-Smit, and Jana de Waal. Insurance for inclusive and sustainable growth. FSD Africa, 2019. https://fsdafrica.org/wp-content/uploads/2025/05/19-10-24-Insurance-for-Growth_KJ-1.pdf.

Wikipedia

{{cite report |last1=Thom |first1=Mia |last2=Hougaard |first2=Christine |last3=Gray |first3=Jeremy |last4=Msulwa |first4=Baraka |last5=Rinehart-Smit |first5=Kate |last6=de Waal |first6=Jana |title=Insurance for inclusive and sustainable growth |publisher=FSD Africa |date=October 2019 |url=https://fsdafrica.org/wp-content/uploads/2025/05/19-10-24-Insurance-for-Growth_KJ-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{thom2019insurance, author = {Thom, Mia and Hougaard, Christine and Gray, Jeremy and Msulwa, Baraka and Rinehart-Smit, Kate and de Waal, Jana}, title = {{Insurance for inclusive and sustainable growth}}, institution = {FSD Africa}, year = {2019}, month = oct, url = {https://fsdafrica.org/wp-content/uploads/2025/05/19-10-24-Insurance-for-Growth_KJ-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }