Africa’s reinsurance markets are experiencing robust growth, despite facing climate challenges and concentration risks, reports indicate. Fitch Ratings’ 2025 outlook for African reinsurance backs the run of strong profitability to carry on, if attendant risks are mitigated.
The strong performance is driven by the best underwriting conditions in over 20 years, along with steady investment income and rising capital buffers, which have set a solid foundation.
Fitch points out that these factors support the sector’s ability to weather pressures from potential price declines, rising claims, and high catastrophe losses. However, high concentration of business in sectors like energy, infrastructure, and transportation is a mounting risk that threatens the industry.
The African market is largely driven by treaty reinsurance, which accounts for about 80% of the market, and is further hampered by limited underwriting expertise which has hindered diversification.
Concentration in a few sectors along with dependence on a few countries and local banks, leaves reinsurance in Africa vulnerable to external shocks. Yet, there are growth opportunities through expanding into new business lines and geographies to improve diversification and strengthen credit quality.
Record profits and sector growth
The African reinsurance market achieved record profits in 2023 and in the first half of 2024, further strengthening reserve adequacy. This growth is best captured in the financial results of Africa Re, the leading pan-African reinsurer.
Africa Re reported a 74.19% year-on-year profit growth for the first three quarters of 2024 to $131.43 million. This was supported by an 8.99% increase in gross written premium income, which reached $879.05 million in the same period.
Dr. Corneille Karekezi, Africa Re’s Chief Executive Officer, attributed this strong performance to successful marketing efforts, positive pricing momentum, and moderate economic growth witnessed by most countries in Africa, its core markets.
“Africa Re continues to demonstrate a strong and resilient business model which is able to capture the full benefits of a conducive environment characterized by a continuous positive adjustment of global reinsurance market prices and the strengthening of returns in the global financial markets,” he says.
Nevertheless, Fitch warns that the reinsurance pricing cycle may have peaked, with stabilization or declines likely.
Climate and catastrophe risks
Africa is grappling with geopolitical tensions, extreme weather conditions, fiscal policy tightening, currency depreciation against the US Dollar and inflationary pressures which could pressure revenue and profitability in the near future.
The Africa Insurance Organisation’s (AIO) Africa Insurance Pulse 2024 report augments that saying the rising natural catastrophe risk remain a key challenge for the continent.
The Insurance Pulse report also warns that the costs of severe weather damages significantly outweigh those of mitigating climate risks. Projections suggest that by 2050, global annual damages from climate events could reach $38 trillion, compared to $6 trillion needed to limit global warming to 2°C.
Africa’s vulnerability to climate risks is stark as it is higher than the global average of 19 % and 11 % for the US and Europe. As such, with average incomes predicted to drop by 22%, there will be an intensity in existing inequalities.
Disaster resilience must encompass three distinct areas. The first arises from natural hazards, including severe droughts in Ethiopia, Somalia, and Kenya, which lead to famine and water shortages.
These also include devastating floods in Mozambique, Nigeria, and South Africa, major earthquakes in Algeria and Morocco, and locust swarms in East Africa that destroy crops.
The second form involves man-made hazards such as geopolitical tensions and conflicts in regions like the Sahel, Somalia, and Libya, resulting in humanitarian crises.
Additionally, oil spills disrupt marine ecosystems and livelihoods, deforestation in the Congo Basin impacts biodiversity, and cyber risks threaten economic stability and digital trust.
Natural hazards like droughts and floods, coupled with man-made challenges such as oil spills and cyber risks, compound disaster resilience pressures.
The third category encompasses socio-natural hazards, where climate change intensifies risks like extreme heatwaves and droughts in the Sahel and Horn of Africa, desertification in the Sahel, and water scarcity in North Africa.
Furthermore, pandemics such as Ebola and COVID-19—shaped by both natural and societal factors—present profound public health and economic challenges across the continent.
While all three types of these disasters are prevalent in Africa, Benhabiles Chérif, President of the African Insurance Organisation (AIO) said the catastrophes know no borders.
“Unity strengthens our capacity to manage these risks. By pooling our knowledge and promoting integrated, sustainable risk management solutions, we aim to forge a more resilient future for Africa,” he says.
Risk reduction, preparedness, and financial protection improve bulwarks against climate catastrophes. Nonetheless, Chérif explains that new insurance lines like property finance, agricultural insurance, and engineering insurance are pivotal to mitigating these disasters.
Case studies of prudent disaster resilience include the Agriculture and Climate Risk Enterprise (ACRE) Africa which focuses on enhancing the resilience and productivity of African farmers by addressing agricultural and climate-related risks through insurance against drought, floods and excessive rainfall.
Since its inception, ACRE has assisted over 3.1 million farmers, providing $100 million in payouts for weather shocks. By offering premiums as low as 50 US cents, the initiative has enabled farmers to increase yields and build resilience.
Demographic and market opportunities for insurance
Africa, with its high fertility rates—especially in Nigeria, Uganda and Kenya—and improved access to healthcare, has a young, fast-growing population that presents vast opportunities. 
The continent’s median age is 19, making it the youngest region in the world. By 2050, Africa’s population is projected to reach 2.4 billion, according to the African Development Bank (AfDB) and this presents a potential demographic dividend.
In 2023, Africa accounted for less than 1% of global premiums, with an average premium of just $46 per person; largely due to South Africa, Morocco, Egypt, and Kenya which dominated the market, representing 84.8% of total premiums.
This is poised to change. The Imarc research group forecasts the African insurance market will grow from $87.4 billion in 2023, at a compound annual growth rate (CAGR) of 6.3% from 2024 to 2032, driven by technology, rapid urbanization, and the booming youth population.
Takalani Sikhavhakhavha and Lauren Lanz point out in the Deloitte 2024/25 Africa Insurance Outlook, that this youthful demographic presents a vast market for innovative insurance companies.
Recent innovations include the adoption of digital insurance platforms (Insurtech), microinsurance for low-income populations, and regulatory reforms that promote transparency.
Insurtech startups are leveraging mobile technology to expand access to insurance with companies such as like Old Mutual and the Sanlam group leading these innovations.
In collaboration with MTN, Sanlam has developed Ayo, a mobile insurance product offering life and hospital coverage to MTN’s prepaid customers. Deloitte points out that the insurance sector’s alignment with Sustainable Development Goals (SDGs) drives sustainable growth.
In tandem with the improvements in Insurtech is the ongoing improvements in microinsurance which has become pivotal in improving financial protection for low-income populations. It covers various risks, including illness, injury, and death, with low-premium plans designed to serve vulnerable communities.
By 2021, the Microinsurance Network’s report revealed that 34 million people across 14 African countries were covered by microinsurance, valued at $9.1 billion. This subsector is projected to grow at a CAGR of 7.7% from 2024 to 2032.
Microinsurance is key to strengthening resilience and promoting financial inclusion as insurance on the continent undergoes demographic shifts, and a new focus on sustainable development.
