The Botswana insurance industry has experienced overall growth in the last six years with the new entrants in the market leading to this growth.
Although the industry has evolved and grown tremendously in the last few decades, some industry experts feel that there is a very real need to shape the industry in a more purposeful and deliberate manner.
Today, Botswana has more insurance providers in market than ever before, with 8 in life insurance and even more in non-life provisions.
From 2017 to 2018, the life sector grew by 11 percent in terms of Gross Written Premiums and held 74 percent of the insurance market share. The whole insurance sector’s gross written premiums have been contributing around 3 percent to GDP over the past several years.
Moletlanyi Tshosa, Executive Head, Broker Division, of Botswana Life Insurance Limited shared the perspective that the industry has evolved – it is bigger, with more entrants into the market, more solutions existing to accommodate the increasing and increasingly diverse needs of customers and clients, and the role of technology becoming increasingly visible and apparent. Running parallel to this, however, is the very real reality that the consumer has evolved. Tshosa cited the fact that spending power across the country remains restricted, and the inequality gaps persist no matter how one looks at it.
He said, “In addition to increased household debt, we face issues of access, with low rates of financial literacy, poor though improving financial inclusion, and the discrepancy between what those in urban centres are able to accomplish by way of consumption of insurance solutions as compared to those outside of the urban peripheries, this being in villages and more remote areas. What I want you to get a sense of is the fact that we, much as any other sector has, face challenges and opportunities, all of which shape the perception of our industry, our colleagues, and what it is we do, as well as how we deliver it.”
“We are facing, as the insurance fraternity, a veritable identity crisis, and it rests upon our own shoulders to change this. We need to shed and dispose of any misconceptions that continue to breed,” he noted.
Insurance accounts for more of Botswana’s National GDP than in previous years, with Life contributing to 2.5 percent of GDP (2019) and short term contributing to 0.7 percent of GDP. This he however said, “It is low, but it will grow – we will make it grow, because the opportunity before us to play an increasingly meaningful, substantive and sustainable role in our socio-economic progress is great. Not only do we have more players in the market, but the quality and stature of those businesses is great – homegrown as well as internationally renowned businesses and brands that are fast establishing themselves as true partners in the industry, and true partners to the end-consumer. As the custodians of this industry, we need to work together towards its development and sustainability.”
Currently, Botswana Life commands a significant share of the market. They are the oldest life insurer and new entrants have significantly reduced their market share.
Looking at the opportunities available, Managing Director, Barclays Life Botswana Motshabi Mokone, suggests there should be micro Insurance targeting the unbanked market and collaboration by the insurance players to influence legislation.
“We should also see investment in technology- tapping into technology for product distribution, operational efficiencies, and improving customer experience, facilitate low cost, simple, accessible savings products, simple, Low cost funeral & life insurance products and Insurance innovation and New distribution channels in order to increase the penetration rate,” she added.