The biggest insurers are expanding in Africa, hoping to tap growth in a rising population and middle class, but climate change could complicate their quest for profits.
This will expose their portfolios to ever more climate risk. The companies said there were multiple ways to mitigate this, including working with clients to reduce the risks they face. Insurers are already counting the cost of climate change elsewhere. In wildfire hot spots such as California, they have pulled out of providing cover.
“A flood in Lagos or drought in Kenya have no correlation with a tsunami in Japan,” said Swiss Re’s market executive for Africa and the Middle East, Beat Strebel. This means losses in one territory can be offset with premium income from another. Strebel pointed to the importance of innovation such as parametric insurance, which Scor also said would be important.
Still, insurers can run into trouble. The Kenya Livestock Insurance Programme is one of the most prominent parametric schemes, winning praise for paying out to tens of thousands of smallholder farmers when their livestock died from drought.
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Insurers eye growth in Africa, despite warmingContinent with increasingly wealthy population seen as attractive market
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