Insurance is a safety net and a resilience-building mechanism.
As African countries face growing threats from climate change, natural disasters, pandemics and political instability, we need to rethink the role of insurance.
This reflects the industry’s commitment to staying current with developments across Africa.
We are not only talking about payouts after tragedy but also a powerful system that reinforces the backbone of societies and strengthens Africa’s social and economic resilience and development.
Why Resilience Matters
Africa’s development journey is defined by progress, but it is also hindered by risk.
Droughts wipe out harvests, floods displace communities, and market shocks derail entire sectors of a country’s economy. When this happens, vulnerable households are the most affected.
Building resilience means giving people, businesses, and governments the ability to bounce back.
It also means designing systems that absorb shocks without breaking, and insurance for disaster risk reduction is key to that.
What Is Resilience Thinking in Insurance?
Resilience thinking is about preparing for disruption rather than reacting to it. In the context of insurance regulation, this means strengthening Africa’s social and economic resilience by creating environments where insurers can:
- Build products for emerging and systemic risks
- Incentivise investment in risk prevention and adaptation
- Collaborate across sectors to protect vulnerable communities
- Use technology and data for faster, smarter responses
Incorporating these ideas into Africa’s insurance policy frameworks supports climate resilience, economic stability, and inclusive growth.
Understanding the Insurance Protection Gap in Africa
The protection gap in Africa remains one of the largest globally.
With less than 3% of the population covered by formal insurance in many countries, insurance penetration in sub-Saharan Africa is far below global averages.
In regions frequently hit by droughts, floods, or conflict, a single event can wipe out years of progress.
What makes the gap even more critical is that it affects the vulnerable in society. Informal workers, smallholder farmers, and low-income urban dwellers typically face the brunt of uninsured risks.
Without affordable, accessible insurance options, they’re left to absorb shocks alone, deepening cycles of vulnerability. This is where strengthening Africa’s social and economic resilience comes in.
Insurance as a Financial Buffer
Think of insurance as a shock absorber. When disaster hits, families with crop or health insurance don’t have to sell their assets to survive.
Governments with sovereign insurance don’t have to divert funds from essential services to cover emergency costs. And microenterprises can recover faster when insured, keeping local economies afloat.
Here’s where things get practical.
- Microinsurance for low-income communities protects farmers, vendors and informal workers.
- Index-based insurance for agriculture ensures farmers get payouts based on rainfall data or yields, with no lengthy claims processes.
- Climate risk insurance in Africa helps governments plan better and avoid reactive crisis-mode spending.
These are working models already changing lives in countries across Africa:
- In Kenya, programs like ACRE Africa’s Bima Pima are helping more than 70,000 smallholder farmers in over 15 counties access weather-index insurance. Farmers pay small premiums and receive payouts via mobile if conditions like drought or excess rain occur. This reduces loss risk and increases food security.
- In Ethiopia, the Agricultural Insurance Consortium (AICE), led by insure-tech Pula, is working with five Ethiopian insurers to serve 10 million farmers with bundled agricultural insurance. Packages cover multiple perils (weather, yield loss) and are integrated into input purchase systems to reduce administrative barriers and cost.
- Through parametric insurance with ARC, the Government of the Republic of Malawi has received payouts that support social protection measures to cushion communities during droughts. For example, recent ARC payouts included USD $3,376,783, following a drought that affected the 2024/2025 agricultural season.
Risk Transfer to Risk Management in Insurance
Insurance in Africa is evolving — moving from a primary focus on post-loss compensation to strategies that integrate prevention, resilience, and adaptation to climate risk.
New tools are emerging that blend data, technology, and traditional risk models. For example:
- Mobile-based insurance solutions enable affordable, accessible coverage, especially in remote regions.
- Parametric insurance for climate shocks uses satellite data to trigger automatic payments.
- Insurance for vulnerable populations in Africa is being bundled with financial literacy programs.
These innovations help people recover and prepare in case of any major occurrence, and that’s the real game-changer.
Building Resilience at Scale through Public & Private Collaboration
No institution can build resilience alone. Governments, insurers, NGOs, and multilateral institutions must work together to embed resilience into national development plans.
Let’s break it down:
- Government-backed insurance initiatives in Africa create frameworks for risk pooling, premium subsidies, and market stability.
- Public-private partnerships in African insurance unlock capital, drive innovation, and extend reach.
- Donor-supported risk financing mechanisms like the African Risk Capacity (ARC) offer coverage for drought, floods, and epidemics.
This builds a sustainable and long-term impact.
In 2020, for example, ARC paid out about USD 28 million through its Risk Pool VI (2019-20 season) to cover drought, flood, and related risks across countries like Cote d’Ivoire, Madagascar, Mauritania, Senegal, and Zimbabwe.
While it did not directly insure against COVID-19, ARC supported response efforts and adapted its tools to help governments maintain essential services during multiple crises.
Bridging the Access Gap for Insurance Inclusion
One major challenge of insurance inclusion is accessibility.
Millions of Africans, especially children, women, and youth, lack access to any form of risk protection.
That has to change. The future lies in inclusive insurance models for Africa’s informal sector. This means:
- Flexible payment options via mobile money.
- Simple, easy-to-understand products.
- Local language customer support.
- Partnerships with cooperatives, microfinance, and community groups.
This builds financial resilience through insurance.
Resilient Economies Start With Resilient People
Resilience is about protecting jobs, families, food systems, infrastructure, and futures.
Some resilience methods in insurance include:
- Climate resilient insurance in Africa.
- Post-disaster recovery and insurance are faster, cheaper, and more equitable when insurance is in place before the disaster.
- Social protection and insurance are complementary.
To sum it up, insurance is for everyone. A resilient society is one where everyone has a safety net.
Next Steps for Policymakers and Industry Leaders
If we want to scale up impact, stakeholders need to consider the following:
- Strengthen regulatory frameworks for insurance in Africa to support innovation and consumer protection.
- Encourage ESG-aligned insurance practices that prioritise sustainability and impact.
- Subsidise premiums for low-income populations to bridge the affordability gap.
- Invest in insurance education and literacy so people can understand what they are buying.
- Promote data-driven risk modelling to tailor products for specific regions and communities.
Every one of these actions moves us closer to a resilient Africa.
Conclusion
We cannot build a resilient Africa without resilience-focused insurance models. Moreover, we can’t build strong insurance systems without commitment, investment, and innovation.
This is why the Nairobi Declaration on Sustainable Insurance is vital. We are pushing for African-led solutions to African challenges through responsible underwriting, risk prevention, and sustainability-focused insurance innovation.
By embedding resilience into the very DNA of the insurance sector, we’re not just reacting to crises; we’re getting ahead of them.
Insurance holds the key to Africa’s resilience agenda. If we get it right, expand access, embed sustainability, and innovate for inclusion, then we’re not just protecting the continent. We are empowering it.