The agreement is likely to be concluded in the next couple of months, Akyianu says from Accra. It will start by using the e-commerce platform to distribute simple policies such as travel, basic life, motor and home insurance. Once running, the agreement may be extended to other African countries, she adds.
Hollard is seeking new partners and distribution channels in Ghana to boost the country’s stubbornly low insurance penetration of around 1% of the GDP. E-commerce companies in Africa, meanwhile, want to offer more services as profitability is constrained by the costs of delivering physical goods. The Covid-19 pandemic has made it more urgent for both industries to be able to sell complete services online.
“Covid-19 has brought the need to digitalise the entire value chain to the fore,” Akyianu says. “That’s the rationale for the e-commerce agreement.” Hollard is South Africa’s largest privately owned insurance group and also operates in Zambia, Namibia, Mozambique and Botswana.
- In June 2020, Hollard partnered with Ghanaian retailer Melcom to offer insurance through its outlets. Policies are available in about 10 of the stores now, and Hollard aims to extend this to all of Melcom’s 40 stores, Akyianu says.
- Hollard Ghana also has a partnership with Vivo Energy — Shell’s distributor in Ghana — to sell insurance at Shell shops.
- “Our strategy in Ghana is to do partnerships,” with “anyone who has the capability to distribute” insurance policies, Akyianu says. “We want to crack the problem of accessibility.”
Breaking down barriers
Low incomes in Ghana make it impossible for many to buy insurance and the informal nature of economic activities makes it harder for many to get access, Akyianu says.
Even among the literate population, there is “limited knowledge” of insurance and misconceptions that it is “a waste of money” or “only for the wealthy”, Akyianu says. She also sees a cultural obstacle in confronting the issue of death. “Even some lawyers here don’t have wills.”
- There are also issues of trust over whether insurance companies will pay out on claims, she adds.
- Fake motor insurance policies, that cost next to nothing to produce and buy, are another problem.
- The creation of a national motor database in 2020 means that cracking down on these policies “has begun in earnest,” Akyianu says.
The approach of using a sales network to sell insurance has proved to be “not very efficient” in tackling the obstacles, she says. “It’s hard to make money with that model.”
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Hollard Ghana used artificial intelligence (AI) to create a chat application on WhatsApp that can handle the process of setting up an insurance policy.
- It is possible to pay premiums, make complaints and claims via the application, which accepts mobile money, Akyianu says.
- Part of the solution to low penetration, Akyianu says, lies in extending the scope of compulsory insurance. An insurance bill — that has been passed by parliament — extends compulsory insurance to areas such as professional indemnity and public liability.
- The bill is awaiting assent from re-elected President Nana Akufo-Addo, Akyianu says. She is “optimistic” that approval is high on his agenda.
Hollard Ghana argues that digital channels have a better chance than sales agents of distributing basic insurance policies.
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