According to Swiss Re, the insurance penetration rate in Africa is 3.5%, while the world average is set at 6.3%. Without South Africa, this rate is less than 1%.
Insurers are seeking innovative distribution solutions to reach out to the tens of millions of people with limited resources. In sub-Saharan Africa, 6.5 individuals out of 10 have a mobile phone whereas in 2020, they will be almost 8 out of 10.
Insurers are therefore turning naturally to the telephone operators to market microinsurance policies. Many insurers are already in business with telephone operators in South Africa, Ghana, Kenya, Namibia, Tanzania or Zimbabwe.
Some technologies developed on mobile phones, including the M-Pesa system, are used to pay premiums, to report claims and to provide compensation. Others offer free insurance coverage in return for the purchase of phone credit units.