By Alex Adi
The recent West African Insurance Companies Association, WAICA Education Conference in Accra brought to light critical discussions about the future of insurance in the region.
With the theme ‘Artificial Intelligence and the Future of Insurance in the Sub-Region,’ the event underscored both the challenges and opportunities facing an industry struggling to break free from low penetration rates.
West Africa’s insurance penetration hovers around 1%, a figure that speaks volumes about the sector’s untapped potential. At the conference, the Acting Commissioner of Insurance, National Insurance Commission (NIC), Mr. Michael Kofi Andoh, challenged insurers to explore how artificial intelligence (AI) could be a transformative tool in this regard. He said transformation requires more than just enthusiasm; it requires a structured approach to ensure that AI integration is effective, inclusive, and sustainable.
West Africa’s unique challenges, a largely informal economy, small-scale insurance companies, and a heavy reliance on agriculture present both hurdles and opportunities for innovation. AI could revolutionize the industry by improving risk assessment, streamlining processes, and enhancing customer engagement.
But Mr. Kofi Andoh said AI will come with its own challenges. Questions about data security, cost implications, and consumer protection also remain critical.
A starting point is a call for WAICA member companies to pool resources for research into AI applications. Collaborative efforts could help mitigate the high costs associated with technological investments while ensuring solutions are tailored to the region’s needs.
Some external pressures the industry also faces from global standards include IFRS 17 and the mounting impacts of climate change. Compliance with IFRS 17, while necessary, could overwhelm smaller firms already grappling with limited resources. This underscores the need for WAICA and regulators to provide technical and financial support to these companies. Climate change, another pressing issue, offers an opportunity for insurers to innovate. Products tailored to mitigate climate-related risks, especially for the agricultural sector, could not only expand market share but also bolster resilience in vulnerable communities.
Ghana’s new Insurance Act (2021) and its associated reforms set a precedent for the region. Initiatives like regulatory sandboxes and risk-based supervision frameworks provide a conducive environment for innovation. Other countries in the sub-region could take cues from Ghana’s approach, adapting these frameworks to suit their local contexts.
Both Mr. Andoh and the Finance Ministry’s representative, Mr. Sampson Akligoh, emphasized the need for actionable outcomes from such conferences. Mr. Andoh said, “Well done is always better than well said.”
For the WAICA Education Conference to have a lasting impact, its participants must commit to a clear roadmap. This should include practical steps to harness AI, strategies to combat climate change-related risks, and frameworks for regional collaboration.
The insurance sector is a critical enabler of economic development. It provides security for businesses, supports long-term investments, and fosters economic stability.
