Climate change and its effect on the insurance industry in Africa

In partnership with the African Insurance Organisation (AIO), the Swiss firm Faber Consulting has carried out a study on the impact of climate change on the insurance sector.

The survey was conducted among insurance, reinsurance and brokerage companies' executives operating in Africa.

The results revealed that floods and droughts are the two main concerns for insurers, followed by heavy rains and tropical cyclones.

According to the respondents, the awareness of climate risks is growing in African countries, especially among governments, companies and consumers. However, this awareness does not always translate into a noticeable increase in the demand for insurance.

The low insurance penetration in Africa can be explained by several factors including high tariffs, lack of awareness and lack of compelling natural catastrophe insurance products.