BMI View: Both Namibia's life and non-life insurance segments are set to enjoy rapid growth over the period from 2015 to 2019, which will in large part be due to the development and distribut ion of micro-insurance products. Both major segments are dominated by large players which are wholly-owned by South African insurance groups. Unsurprisingly, Namibia therefore shares many characteristics with its neighbouring country.
The Namibian insurance sector is characterised by its close connection with South African insurance companies. Both Namibia's life and non-life segments are dominated by wholly-owned subsidiaries of large South African groups, and because of this, trends in both segments mirror those of their counterparts in South Africa. Accordingly, the incumbents are adept at producing and delivering products and solutions which are attractive to lower-income groups of the Namibian population. In terms of widely used metrics, such as penetration (8.1% of GDP in both major segments) and density (USD432 per capita in 2015), insurance is well-established by the standards of Sub-Saharan Africa (and, indeed, many developed countries).
At nearly 70% market share, Namibia's life insurance market is significantly larger than its non-life counterpart. This is, however, expected to change as non-life insurance is set to outpace life insurance at a rapid rate over the coming five years. In 2019, life insurance should account for 61% of total premiums written. Regardless, written life insurance premiums will grow by 6% annually over our forecast period. This steady growth will be driven primarily by innovation in product development and distribution channels; as much as other countries in Sub-Saharan Africa, Namibia's population is generally well-receptive to innovative savings/production products and imaginative distribution strategies. Accordingly, the lion's share of life premium growth will result from the growing sale of micro-insurance solutions -- mainly through mobile phones, in collaboration with strategic partners in the telecommunications sector. Importantly, however, Namibia's life insurance market is characterised by a lack of price competition, which imposes unattractively high entry barriers to potential newcomers. In spite of the market's steady growth prospects, we consider it unlikely that there will be many new players seeking to establish a presence.
Non-life insurance, on the other hand, may more likely provide a more promising environment for (foreign) investors to acquire a share of what is a rapidly growing market. Between 2015 and 2019, non-life insurance is set to grow at an annual rate of roughly 16% - increasing its market share from 31% to 39%. This trend will be predicated upon a number of key factors, including the expansion of the country's passenger car fleet (+13% annually) and coverage of currently uninsured vehicles, as well as persisting growth in the personal accident niche. The non-life market is further characterised by the fact that it grows in line with real GDP, which is projected to reach 6.4% annually across our forecast period -- indicating that the Namibian population will increasingly be better able to afford short-term insurance solutions in conjunction with their rising expenditures on household-related products. In terms of growth prospects, particularly non-life insurance will therefore offer more scope for new investments, especially by those which are specialised in providing low-cost insurance solutions.
Press reports of late 2015 have highlighted how Econet is offering its Ecolife insurance products to its mobile phone customers in Zimbabwe and Namibia. In mid-May 2015, South African major Old Mutual announced that had hired three senior executives from Telesure to launch a direct insurance business in the various countries of Sub-Saharan Africa (outside South Africa itself) in which Old Mutual operates.
MMI's Metropolitan International has merged its insurance operations in Namibia.
Key BMI Forecasts
In 2015, life insurance premiums should grow by 12.5% to USD711mn.
Non-life premiums are expected to rise by 23.9% to USD321.
Within this sub-total, motor vehicle insurance premiums are expected to expand by 32.5% to USD188.9mn.
Personal accident insurance premiums will likely rise by 15.6% to USD32.4mn.