Swiss Re identifies 21 frontier markets for insurance growth

But says there is no one-size fits-all approach

Swiss Re says it’s been looking around, turning over a few stones and has come up with 21 markets in sub-Saharan Africa, Latin America and Asia that are ripe for insurance growth and that deserve more attention. In a new report, “Insuring the Frontier Markets,” it says many of them have gross domestic products expanding at between five and 10 percent yet their penetration rates for insurance are often less than 1.5 percent.

But before you stampede to the airport with your Lonely Planet phrase book and your standard PowerPoint pitch, the company warns: “There is no one-size-fits-all’ approach; insurers need to navigate differing regulatory regimes, cultural characteristics and economic situations.” Well… yeah.

Interestingly, Swiss Re Chief Economist Kurt Karl argues, “Capturing the potential in frontier markets will require a long-term strategy. Nonetheless, this work shows that there is a real ‘early-mover’ advantage to be gained for insurers who understand how to access and develop these markets. The benefits will come once these markets reach the critical middle-income threshold when consumers and businesses start buying more insurance.”

Read: Insurers and governments should collaborate on risk mitigation, says Kurt Karl

So which countries do they have in mind? Some might not look so appetizing on first blush. They include Nigeria (infamous for its incredible government corruption and over-capacity of Internet princes), Ecuador (now recovering from the earthquake), Vietnam and Azerbaijan.

Swiss Re considers every country below the Sahara in Africa pretty much a frontier market (excluding South Africa) and says auto insurance “is gaining importance due to increasing enforcement of compulsory motor third-party liability (MTPL) cover in many countries.”

In terms of Asia, the company says Vietnam is the most developed market in the region, with the highest insurance penetration. Some of the frontier markets have been revising their insurance regulations lately to “enable faster sector growth,” including Cambodia. “In Myanmar, where the insurance market has been in state hands since 1963, twelve private companies were granted conditional approval to provide insurance services in 2013.”

 

 

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.