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Faber Consulting and the African Insurance Organisation launched the Africa Insurance Pulse 2022 at the 48th AIO Conference and General Assembly, held in Nairobi, Kenya, from 25 to 30 June. This year's edition focused on "Climate Change and its Impact on the African Insurance Sector".

According to the study, Africa is particularly vulnerable to the effects of climate change due to its exposure to extreme weather conditions, low adaptive capacity and widespread poverty.

For East and West Africa, climate change is projected to reduce GDP per capita growth by about 15% until 2050 due to severe warming. In Northern and Southern Africa, the negative impact of climate change is estimated to knock off 10% and in Central Africa about 5% of GDP growth.

The report, based on interviews with senior executives from insurers, reinsurers and brokers operating in Africa, finds that floods and droughts are the two most common climate risks of the African insurance markets. The frequency of climate risks and the severity of extreme weather events, especially tropical storms and floods are also increasing significantly.

Although awareness of climate change is increasing in Africa, this has not yet translated into a significant increase in insurance demand. While the penetration of commercial insurance to protect businesses from climate change is higher, it remains very low among consumers, due to a combination of affordability, awareness and accessibility.

However, most respondents also see climate change as an opportunity for the insurance industry. Business opportunities are emerging from the rise of renewable energy investment as the continent seeks to move away from its dependence on fossil fuels towards carbon neutrality and capitalise on the fact that Africa has more hours of sunshine than any other region. 

Download the 2022 Africa Insurance Pulse