The life insurance sect, already far larger than the non-life sector, will drive growth in the insurance industry over the next five years. An increasing challenge by the competition to the dominant market leader being Botswana life will boost product reliability diversification and help deliver average annual growth of around 8% to around USD500million by 2019. The non-life sector will struggle in comparison, with growth closer to 4% largely delivered by property insurance, already the largest line in the non-life sector.
A report by BMI Research suggests that “life insurance in Botswana is dominated by Botswana Life, boasting over 75% of all premiums each year from 2009 to 2012, equating to over USD250mn in gross premiums in 2012.”
Approximately one in every two Pula spent on insurance in Botswana is received by Botswana Life. Investors and analysts expect that this market share shall remain elevated in the next five years, with the insurer capturing much of the USD160million growth in premiums between 2015 and 2019. The life claims ratio, elevated at 96% in 2009, has returned to around 40% where they expect it to remain, edging gradually upwards as the sector matures.
The smaller non-life sector is composed principally of motor insurance and property insurance, with stockbrokers forecasting that they will account for 30% and 40% of non-life premiums respectively in 2015. Motor insurance growth will be slower as the cost of premiums continues to fall as well as the influx of imported motor vehicles remains high. Property insurance, on the other hand, will see significant expansion within the next four years, rising from USD65million in 2015 to almost USD90mn by 2019.
The non-life market is more diversified than the life segment. Botswana Insurance Company leads the market with USD33.4million in premiums, however its market share has declined in recent years with the emergence of a number of new players like Bramer life which belongs to Reginah Vaka-Sikalesele, a former CEO of Botswana life.
“Some are offering diverse lines, such as competitors having close involvement with the diamond mining industry,” reads the report. “This increased competition has driven price competition, with the motor insurance line bearing much of the impact.”
Some of the key forecasts are that life premiums will reach USD380million in 2015, annual growth of 8% will take gross premiums to over USD500million by 2019.