Central African Republic Life Insurance Penetration Rate Reached 0.008% in 2011, Says Timetric06 May 2013 • by Natalie Aster
The Central African Republic (CAR) insurance industry grew at a CAGR of 9.8% during the review period. The increase was partly as a consequence of stable economic development, the nation’s expanding mining industry and the beginning of various infrastructure projects centering around the laying of fiber optic cables, modernizing transport routes and improving energy capacity. However, the industry’s market size is relatively small when considered within the context of the global insurance framework. African insurance penetration rates are low and stand at around 1% of the population. For the CAR this figure stood at 0.36% in 2012, compared to the global average of 6.8%. Approximately 90% of the African population remains uninsured. However, this provides immense growth potential and foreign investment opportunities. This, combined with stable economic development, is projected to support the development of the industry over the forecast period, which is projected to grow at a CAGR of 10.7%.
As the performance of insurance industry is closely correlated with the economic growth of a nation; stable economic development in the CAR spurred the demand for insurance products during the review period. GDP at constant prices increased at a CAGR of 2.5%. GDP growth is projected to remain positive over the forecast period, which is likely to support the industry expansion.
According to the report “The Insurance Industry in Central African Republic, Key Trends and Opportunities to 2017” by Timetric, the CAR’s life insurance penetration rate increased from 0.007% in 2008 to 0.008% in 2011, while the penetration of the non-life insurance segment as a percentage of GDP increased from 0.27% in 2008 to 0.31% in 2012. For the personal accident and health insurance segment, penetration rates rose from 0.04% in 2008 0.05% in 2012. Despite the increase, the industry’s total penetration as a percentage of GDP is low and stood 0.36% in 2012. The situation provides new market entrants with positive growth potential.
The Insurance Industry in Central African Republic, Key Trends and Opportunities to 2017
Published: March, 2013
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According to the World Bank, the CAR has one of the lowest life expectancy rates in Africa. Life expectancy at birth stood 48.3 years in 2011. This limits the demand for health, pension and term life insurance coverage.
The life insurance segment recorded a high combined ratio during the review period, raising concerns among insurers. The segment registered combined ratio of over 100% during the review period with value reaching as high as 249.8% in 2009. A combined ratio of more than 100% reflects underwriting losses. Companies must address this challenge by improving their risk underwriting capabilities.
More information can be found in the report “The Insurance Industry in Central African Republic, Key Trends and Opportunities to 2017” by Timetric.
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