“Insurance has always been a tool for building resilience. But in Africa, many households and small businesses still operate one shock away from financial collapse,” says Franklin Manchester, Global Insurance Strategic Advisor at SAS. “To bridge the divide, insurers must not only innovate but reimagine how they assess, price and deliver coverage to underserved communities.”

A recent global survey by SAS and Economist Impact on the future of insurance revealed that most insurance executives see closing the protection gap as both an ethical obligation (78%) and a business opportunity (76%). The survey of more than 500 insurance leaders highlights three key enablers: digital innovation, next-generation risk modelling, and deeper collaboration with regulators, governments and similar stakeholders.

The role of advanced technologies in inclusive insurance

AI and advanced analytics allow insurers to ingest and analyse vast new data sets, from geospatial climate models to real-time customer behaviour data.

“Especially in fast-changing environments, where historical data is lacking or unreliable, we are seeing machine learning and synthetic data generation play a key role in pricing risk mor fairly. Not only can proven modelling approaches for insurance risk be optimised, but new, innovative approaches can also become a reality,” says Thorsten Hein, Insurance Lead for Global Product Marketing at SAS.

Parametric insurance, which pays out based on predefined triggers like rainfall or temperature thresholds, is one area where innovation is making an impact. These models are easier to understand, faster to settle, and ideal for climate-related and agricultural risks, which are key concerns in Africa.

Meanwhile, unified decisioning platforms are helping insurers modernise outdated systems and eliminate inefficiencies.

“By consolidating data, analytics and customer engagement into a single, connected environment, across multiple applications and decision-points, insurers can not only process claims faster, reduce fraud and restore trust. They can also further automate underwriting and make customer onboarding much more efficient, resulting in less friction between departments and significantly smoother customer journeys,” says Hein.

Rebuilding trust and removing friction

Trust remains a critical barrier. According to the survey, 77% of global executives believe that consumer distrust is a major obstacle to closing the protection gap. This is particularly relevant in Africa, where historically low levels of insurance usage have reinforced perceptions of poor value or opaque practices.

Manchester believes technology can help rebuild credibility.

“Words are data,” he says. “Every text message, call or chatbot interaction is a chance to understand the customer better. With natural language processing and generative AI, insurers can deliver advice and support that feels more personal, contextual and relevant, similar to what a community-based broker might have done in the past.”

Furthermore, embedded insurance and mobile-first distribution channels are reducing friction and bringing simple, accessible products to market. In Kenya, Nigeria and South Africa, partnerships between insurers, telecoms and fintechs are already proving successful in reaching first-time insurance users.

Local relevance, global alignment

Africa’s protection gap is both a development challenge and a commercial opportunity. Two-thirds of adults in surveyed countries remain uninsured. Yet innovations in mobile payments, cloud computing and AI make it possible to serve these markets in ways that were unthinkable a decade ago.

“Closing the gap is not just about expanding access. It's about enabling sustainable inclusion, making sure that coverage is affordable, claims are honoured, and the industry delivers real, tangible value while also securing its profitability and expanding its market position for the long term,” says Hein.

“This is not a challenge any one insurer or government can solve alone,” Manchester adds. “It will require industrywide collaboration, a commitment to ethical data practices and a willingness to innovate boldly.”

SAS continues to work with insurers and policymakers across Africa to develop solutions that combine local market knowledge with global analytics capabilities. From climate-resilient underwriting to AI-driven fraud detection, the tools are in place. What is needed now is execution.

Reference:

* African Insurance Organization Annual Report 2023

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