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Axco celebrates 50th anniversary with special report

05 December 2016

Axco celebrates 50th anniversary with special report

Axco Insurance Information Services (Axco) has published a report highlighting how public-private partnerships (PPP) can unlock opportunities in emerging markets for (re)insurance companies.

In 2015 emerging markets accounted for just over 7.26% of global insurance premiums.  Per capita spend on insurance in emerging markets (excluding China) is a mere 3.21% of that spent in advanced markets and the average insurance penetration in emerging economies actually decreased by 0.09% in 2015. The report highlights that limited insurance penetration, particularly among low-income households is due to a lack of awareness of basic insurance products and associated benefits, but that merely means there is untapped potential.

The report advises that closing the protection gap particularly in South Asia and Sub-Saharan Africa offers the greatest opportunities, bolstered by an increased demand for insurance from a growing population and middle class. Between 2015 and 2050 there is a projected global population growth of 1.3 billion people in Africa. However, it underlines that developing productive PPPs, as well as understanding the local cultural, recruitment and regulatory landscape, is critical to success when attempting to enter emerging insurance markets.

Examples of successful PPPs are highlighted in the report. The African Risk Capacity (ARC), which enables implementation of an early response programme to affected communities in advance of humanitarian aid. ARC emphasises the need for premium support mechanisms to ensure participation and appropriate levels of coverage, such as embedding premium payments into a country's national laws and budgeting process, as well as an innovative approach to financing.

A joint Asian Development Bank (ADB) - Japan Fund for Poverty Reduction (JFPR) in Bangladesh, which is also examined, details the need to develop micro-insurance to help imbed insurance concepts in a passively hostile population. Particularly explored is how micro-insurance can be used to reduce poverty by addressing common individual and catastrophic shocks. However, legal and regulatory frameworks, especially in the supervision of micro-insurance activities, need to be developed by collaborating with local governments to enable international reinsurance companies to enter the market.

Tim Yeates, Managing Direct at Axco commented:  "As conditions in established markets continue to remain challenging, (re)insurers are exploring opportunities to diversify; entering new and high growth markets is an increasingly attractive option. Knowledge of the local market is imperative. Leveraging this knowledge to develop public-private partnerships to help educate local people on the benefits of insurance is key to unlocking growth opportunities; as is working with local partners and governments to ensure that regulation is welcoming to foreigner investors and others entering the market."

Download the reportEmbedding Insurance in the Frontier Markets: Partnerships for Emerging Opportunities.


 

 

About Axco Insurance Information Services:Axco is the leading supplier of global insurance market information with over 50 years' experience in researching and publishing industry intelligence on insurance and employee benefits. Its unique business model and methods of research have enabled the development of an extensive suite of products comprising in-depth reports, focused profiles, Q&A databases, intelligent questioning tools, and email services which are delivered to every corner of the globe.