Insurance24 Reporter
VIC Falls: Africa’s insurance industry must accelerate the adoption of artificial intelligence, strengthen climate risk protection and develop inclusive insurance products to close the continent’s widening protection gap and support sustainable economic growth, Willem Smith has said.
Delivering the regional keynote address at the Southern Africa Insurance Indaba 2026 in Victoria Falls, Smith said the future of insurance on the continent would depend on the industry’s ability to adapt to emerging risks while retaining its fundamental role of protecting businesses, individuals and economies against financial uncertainty.
In a presentation titled Future Proofing Africa’s Insurance: From Pirates to Algorithms, Smith argued that although the principles of insurance had remained largely unchanged for thousands of years, the risks confronting the industry and the technologies available to address them had evolved significantly.
He identified climate change, cybercrime, artificial intelligence, economic pressures, changing demographics and limited insurance penetration as some of the major forces reshaping the African insurance landscape.
Smith said insurance was not merely a financial protection mechanism but an important catalyst for economic development because it enabled businesses to access credit, encouraged investment and supported the expansion of productive sectors.
He explained that when businesses insured their buildings, equipment, stock and other assets, lenders were more confident in extending credit because their collateral was protected against unforeseen losses.
“Every insured factory is a bankable factory,” he said, highlighting the relationship between insurance availability, access to finance and industrialisation.
Smith noted that Africa was experiencing relatively strong economic growth but remained significantly underinsured, creating a major obstacle to financing development projects and expanding business activity.
He put Africa’s insurance penetration at approximately 2.7 percent of gross domestic product, against a global average of 7.4 percent, with South Africa remaining the only African market exceeding the global benchmark.
He said the continent’s insurance industry needed to expand its capacity to provide protection for businesses and individuals, particularly small and medium-sized enterprises and those operating in the informal economy.
Turning to technological disruption, Smith identified artificial intelligence as one of the most significant opportunities for insurers, with applications across underwriting, claims processing, fraud detection and customer inclusion.
He said AI could significantly reduce processing times, improve risk assessment and enable insurers to develop products for customers who lacked conventional credit histories.
However, he cautioned that technological adoption needed to be supported by reliable data, skilled personnel and effective governance to ensure that automated decisions remained fair, transparent and accountable.
Smith called for greater collaboration among insurers through initiatives such as shared industry data repositories, arguing that the quality of information available to the industry would determine how effectively AI could be deployed.
Climate change also featured prominently in his address, with Smith highlighting the growing financial consequences of natural disasters across the continent.
He cited estimates that natural catastrophe losses in Africa reached approximately US$3 billion in 2025, with less than US$500 million covered by insurance.
He said the significant proportion of uninsured losses demonstrated the urgent need for innovative products, including parametric insurance, which provides payouts when predetermined weather or environmental thresholds are reached.
Smith also advocated for regional and sovereign risk pools, public-private partnerships and catastrophe bonds to strengthen the continent’s capacity to absorb major disaster-related losses.
He urged insurers to move beyond simply compensating policyholders after disasters by using insurance pricing to encourage better building standards, flood protection and climate-smart agricultural practices.
On the life insurance and pensions front, Smith warned that increasing life expectancy would require the industry to rethink retirement planning, healthcare protection and long-term savings products.
With Africa’s population ageing gradually, he said insurers needed to develop affordable retirement and longevity products that also reached informal sector workers through mechanisms such as mobile money and micro-contributions.
He said the industry had an opportunity to build sustainable savings habits while Africa still had a predominantly young population.
In concluding, Smith said the industry’s future would depend on maintaining public trust while embracing new ways of delivering insurance.
He emphasised that the fundamental promise of insurance remained unchanged: pooling risks, pricing them fairly and paying claims when policyholders needed protection.
“Future proofing Africa’s insurance means pricing new risks with better data, reaching customers the industry has never served, and remaining the one thing bankers and families can rely on: the promise to pay,” he said.
