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Allianz Africa

Magazine

Allianz: putting a premium on African peace of mind

Published 29 March 2022 in Magazine • 7 min read • Audio availableAudio available

Insurance take up on the continent is low, but Delphine Traoré, CEO of Allianz Africa, is confident that a wind of change is blowing. 

 

With its youthful population, expanding middle class, rampant smartphone adoption and a bigger diaspora migrating back home,Africa’s insurance market has newly emerging power. And, as chief executive of Allianz Africa, part of Allianz Group, the global insurer,Delphine Traoré is understandably bullish on the region’s prospects. 

One reason for her optimism is the continent’s relatively low insurance penetration rate:it stood at under 3% in 2019, compared with the global average penetration rate above 7%.However, the prospects for growth are immense, especially for digital insurance platforms, given recent political upheavals, natural disasters and the economic dislocation caused by the fallout from the coronavirus pandemic. 

“The African insurance industry is growing faster than [most of] the rest of the world,”aside from Latin America, said Traoré in an interview at her office in Abidjan on the southern Atlantic coast of Côte d’Ivoire in West Africa. 

Allianz has more than a century of history in Africa, where it has built and is continually expanding its footprint, currently present in 12 countries across the continent. 

When it comes to insurance penetration in the region, South Africa is by far the biggest player, with about 70% of the continent’s total market share. Next is Morocco, then Kenya, Egypt and finally Nigeria, where penetration is just 0.5%. Reflecting on these huge gaps in insurance coverage between countries, Traoré sees an increasingly important role for public-private partnerships in driving up adoption and, by extension, growth and profits for Allianz. 

This could be especially important for the large commodity exporters, such as Nigeria and Angola. “Most of the farmers across Africa are not insured,” Traoré said. “When there’s a major drought, that pretty much paralyzes a country. You could be buying insurance, as a state, to be able to come to the rescue of your people.” 

Such a partnership would, therefore, be vital in tackling climate change risks, which are especially salient for Africa. Unpredictable weather patterns are already contributing to food insecurity and population displacement as well as putting a strain on water resources, which hits the most vulnerable the hardest. 

A friendly alliance: Delphine Traoré and Robert Hooijberg

“Climate change is impacting Africa quite heavily today,” said Traoré. “People have seen the devastation of floods where people lose their whole livelihoods, and sometimes when they see the devastation is when you also explain to them that [they] could have protected [themselves] from it.”  

When it comes to the major drivers of economic growth in emerging countries, she believes insurance is often overlooked, despite its role in improving financial stability and mitigating risks. In fact, she says expanding Africa’s insurance market could generate greater shared prosperity in the region. “If you increase insurance penetration, it also means that you are improving the livelihoods of people, because their assets are [protected].”    

While the continent’s economic prospects took a hit following the huge setback caused by COVID-19, Traoré is clear that microinsurance — a type of financial service aimed at low-income communities, typified by low premiums and coverage limits — is a potential game-changer, as it can expand the reach of insurance beyond the relatively wealthy. 

Such microinsurance is increasingly facilitated by technology adoption and innovation.Just as M-pesa, launched by Safaricom in Kenya in 2007, made banking available to the masses, Traoré said mobile insurance could help Allianz and other insurers tap a vast new audience. “Africa has a population of 1.3 billion and [nearly] half of the population is connected via mobile. The opportunity that we have there as an insurance industry is to reduce the cost of distributing our products.” 

Furthermore, the idea of mobile insurance would help large providers such as Allianz tackle the challenge of the public’s lack of trust in major financial institutions;the high prevalence of fraud has kept premiums relatively high in Africa.    

Most farmers across Africa are not insured. When there’s a major drought, that pretty much paralyzes a country. You could be buying insurance, as a state, to be able to come to the rescue of your people.

“People that have a mobile wallet do not have a bank account, they seem to trust the operator rather than the financial institutions,” said Traoré. “How do we combine our efforts with [mobile operators] and show our products through mobile [phones]? This is a big driver and change for us as far as growth is concerned in Africa.” 

She believes that such a mobile product would also help to reduce the complexity of buying insurance through traditional sales channels, provided it came with an easily workable user interface.“This is sometimes the challenge of insurance companies. We tend to be so complex; a motor insurance policy could be 20 pages long.” 

But given the high levels of mistrust, customer education is just as important as technological innovation to Allianz’s future prospects.We need to convince low-income families to take up insurance to [safeguard their] futures,” said Traoré. “One of the major things holding them back is just unfamiliarity with insurance. They don’t have a lot of spare income to be able to give money to an insurance company.” 

Part of the solution is “explaining to them that the day a big claim happens, we will probably pay more than you’ve ever paid us in insurance premiums”.With this in mind, the affordability of life insurance in particular is of special concern to a youthful population. “In Africa, we don’t want to talk about death,” she said, as it’s far off for many people. 

To appeal to this typically tech savvy segment, Traoré sees an increasingly important role for influencer marketing. Influencers use their large social media followings to endorse products and affect purchasing decisions. They “would be a key driver to changing the mindsets … as a sector we need to use influencers a bit more to sell insurance”. 

Despite a young population, Africa has been experiencing a brain drain, with tens of thousands of skilled professionals leaving the continent annually, with a huge cost incurred for the countries that have already invested in their development. Traoré wants to bring the skilled diaspora back, however. 

She describes herself as a pan-Africanist, reflecting her belief that peoples of African descent have common interests and should be unified.“Africa tends to have a very limited talent pool,” she said. This is a major economic headache in addition to a corporate one for Allianz, given that a large chunk of development aid is spent on the salaries of expatriates filling gaps in the local workforce.   

It is hard to generalize as to the intentions of those leaving from the continent’s massive population size, but surveys suggest many Africans take issue with poor infrastructure, power outages and corruption. Furthermore, in the World bank’s annual rankings on the ease of doing business, African countries score poorly. 

However, there is also some good news: economic liberalization and increased investment have provided new opportunities. But for many who return, they do so because they want to contribute to their ancestral homeland. Traoré herself heard the call of Africa: she returned after a globetrotting early career. “I felt that it was my duty,” she said. 

Looking ahead, she hopes that many more people of African descent will make a similar move back to the motherland, if for nothing else than to smooth her own organization’s succession plans. “I hope to build more and more African leaders and create the pipeline of young women and young men that are entering the insurance segment. They will be the ones taking the torch from us.”

Africa AllianzAfrica’s young population has been quick to adopt technology, particularly the smartphone.

Delphine Traoré in profile

Delphine was originally from Burkina Faso — the landlocked country in West Africa, currently making headlines for a military coup that has overthrown its president Roch Kaboré. She left in the 1990s to further her education. Her father paid her fees for a bachelor’s degree in business and accounting at the University of Pittsburgh. 

She used the US degree to launch her career in global finance.After graduating in 1996, she joined Ohio Casualty, part of the insurance group Liberty Mutual,where she worked as an underwriter, evaluating and analyzing the risks involved in insuring people and assets, and later as an underwriting manager. 

In 2005, she joined adivision of Allianz responsible for global business insurance and large corporate and specialty risks.She was based in Canada, where she was responsible for identifying potential markets, client and broker target segments.In 2012, she became chief executive of that division, known as Allianz Global Corporate & Specialty (AGCS), and moved to Johannesburg, South Africa, before rising further up the ranks to become chief operating officer and later CEO of Allianz Africa as a whole.   

 

Authors

Robert Hooijberg

Professor of Organizational Behaviour at IMD

Robert Hooijberg is Professor of Organizational Behavior at IMD. His areas of special interest are leadership, negotiations, team building, digital transformation, and organizational culture. Before joining IMD in September 2000, Professor Hooijberg taught at Rutgers University in their MBA and Executive MBA programs in New Jersey, Singapore, and Beijing. He is Program Director of the Breakthrough Program for Senior Executives and the Negotiating for Value Creation course.

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