Fintechs are key to insurance penetration - Experts

Financial technology firms (fintechs) have become key enablers and positive disruptors in the country’s quest to deepen insurance penetration.

This was the position of insurance and pensions sector experts at the just-ended 2023 Money Summit, which was hosted by the Business & Financial Times on the theme Africa’s robust financial sector: the catalyst for a sustainable economic growth.

Speaking on the sub-theme, ‘Africa’s robust securities industry: the role of insurance, pensions, fund managers and other market players’, Managing Director of Tesah Capital, Eugenia Basheer, said fintechs have become very critical and less of a disruption as the platforms are helping in ensuring efficiency through onboarding, validation, making key investment decisions, and reporting.

“These processes have become easier to do with fintechs, while enhancing great customer friendly experiences without having clients walk into physical offices.” she said.

Group CEO-Glico Group, Edward Forkuo Kyei, said the contribution of fintechs to the industry will remain relevant, and called on players to utilise it in bringing efficiency to the sector.

He said fintechs have become the bedrock from which penetration will increase.

The Glico boss suggested regulators should continue collaborating with sector players to increase insurance penetration, which currently stands at below two percent.

“Both regulators and industry must think outside the box – the situation of low penetration is not hopeless; industry must come up with innovative products to attract customers,” he said.

Discussing effects of the Domestic Debt Exchange Programme on the sector, it was agreed the initiative had taken a toll on the industry as industry has been affected – though pension funds were exempted.

Managing Director-Stanbic Investment Services, Kwabena Boamah, explained that the current happenings have shown government is no longer risk-free when it comes to investments.

He was however optimistic that the market will recover though it is currently experiencing lows.

“Lots of investments are in the system. Most are genuine, some are Ponzi. The interesting thing is that people don’t want to habour risks but want returns. Investors must be educated on the risk of investment, and how the investor’s investment is within affordable risk,” he suggested.

Equally, the Chief Investment Officer-Axis Pensions Trust, Nana Wiafe, said the DDEP did not come as a surprise to the sector.

The only fortunate thing, according to him, was that all pensioner contributors have been exempted – but maintained that not receiving coupons timeously is creating issues for holders.

The Head-Group Business, Starlife Assurance, Dzifa Fiati, equally explained that the DDEP has been very challenging for the sector, as the move has impacted cash-flow with many problems.

Most insurers are writing losses due to the DDEP, and the sector is in a deep abyss right now. Starlife has been hit but diversification has helped, she indicated, adding: “Insurance companies have been hit with confidence issues”.

She suggested a reward system for shareholders when times get better.