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The Insurance Industry in Botswana

The Insurance Industry in Botswana 2020

Louise Mitchell | Botswana | 29 January 2020

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Report Coverage

This report focuses on life insurance, reinsurance and short-term insurance, including travel insurance, in Botswana. There is comprehensive information on the size and state of the industry, companies operating in the sector, their total assets and gross premiums (2018 figures) and factors that influence the insurance industry. There are profiles of 26 companies including the dominant player BIHL, the only major insurance company listed on the Botswana Stock Exchange and Letshego Holdings, a player in the microinsurance sector, which is also listed. Other profiles include Botswana Insurance Company, which notified Botswana’s Competition Authority of the proposed acquisition of BIHL Insurance Company Ltd, trading as Legal Guard, a BIHL subsidiary.

Introduction

This report focuses on life insurance, reinsurance and short-term insurance, including travel insurance, in Botswana. The insurance sector contributed 3.5% to the country’s economy in 2018. Total gross written premiums increased by 8% from P5bn (pula) (US$416.4m) in 2017 to P5.4bn (US$485.5m) in 2018. Non-bank Financial Institutions Regulatory Authority (Nbfira) data shows total assets of reinsurers and insurers decreased by 19.3% to P19.01bn in 2018 from P23.6bn in 2017. The dominant player is Botswana Insurance Holdings Limited (BIHL Group), in which South Africa’s Sanlam has a 59% shareholding. BIHL’s market share in 2018 was 83.1% (P15.8bn) of the total assets of the industry. South African insurance companies and banks have a significant presence in Botswana’s insurance industry. The life insurance sector continued to hold the largest market share in 2018 in terms of total assets and total gross written premiums.

Strengths

• Major South African insurance companies have a strong presence and bring with them skills and experience.
• New legislation promotes the use of local insurance companies and agents.
• The industry is well-capitalised and financially sound.
• The new competition regulatory framework will encourage competition.
• The regulatory environment is strengthened through new legislation.

Weaknesses

• Constrained performance by non-life insurance and reinsurance.
• Dominance of one player.
• High unemployment rate and poverty.
• Lack of financial literacy precludes some low-income consumers from buying insurance.
• Lack of new entrants in short- and long-term insurance sectors.
• Penetration of the market is low and the level of underinsurance remains high.
• Shortage of skills for new technologies.
• Slowing economic growth affects consumers’ disposable income.
• The economy is vulnerable to the poor economic performance of neighbouring countries.

Opportunities

• Low penetration rate of small businesses means there are opportunities to sell insurance.
• Partnerships with technology companies present new distribution channels.
• The emerging urbanised middle class, both locally and across sub-Saharan Africa, represents a valuable pool of potential new policyholders.
• The low-income market presents growth opportunities for microinsurance products.

Threats

• Extreme weather conditions will increase pressure on short-term insurance premiums.
• Insurance companies host databases with sensitive client data and as such they are targets of cybercrime.

Outlook

Macroeconomic conditions will be a determining factor in the pace of industry growth. While the low penetration rate presents growth opportunities in all the classes of insurance, low economic growth will continue to affect disposable income. Improvement in the unemployment rate will expand the potential customer base for insurance products. Commentators say that insurance companies will innovate more in their route to market, to ensure they meet needs of customers with regard to technology preferences and to provide tailored products to low-income consumers. Innovation will be accompanied by investment into ever more sophisticated technology systems and people with the required skills. The trend of insurance, banking and technology becoming increasingly more integrated, is expected to continue as it is a global trend.

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The Insurance Industry in Botswana 2020

Full Report

R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Table of Contents

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PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
3. DESCRIPTION OF THE INDUSTRY 2
3.1. Industry Value Chain 5
3.2. Geographic Position 6
4. SIZE OF THE INDUSTRY 7
5. STATE OF THE INDUSTRY 11
5.1. Local 11
5.1.1. Corporate Actions 12
5.1.2. Regulations 12
5.1.3. Enterprise Development and Social Economic Development 15
5.2. Continental 15
5.3. International 19
6. INFLUENCING FACTORS 22
6.1. Economic Environment 22
6.2. Financial Inclusion 23
6.3. HIV/AIDS 25
6.4. Information Technology 25
6.5. Labour 26
6.6. Cybercrime 26
6.7. Environmental, Social and Governance (ESG) 27
6.8. Climate Change and Extreme Weather 27
7. COMPETITION 28
7.1. Barriers to Entry 29
8. SWOT ANALYSIS 29
9. OUTLOOK 30
10. INDUSTRY ASSOCIATIONS 31
11. REFERENCES 31
11.1. Publications 31
11.2. Websites 32
APPENDIX 1 33
Classes of General Insurance 33
APPENDIX 2 35
Classes of Long-term Insurance 35
APPENDIX 2 36
Summary of Notable Players 36
COMPANY PROFILES 39
AFRICAN BANKING CORPORATION OF BOTSWANA LTD 39
ALPHA DIRECT INSURANCE COMPANY (PTY) LTD 43
B.I.C.B LTD 45
BANK GABORONE LTD 47
BARCLAYS INSURANCE SERVICES (PTY) LTD 49
BOTSWANA INSURANCE COMPANY LTD 51
BOTSWANA INSURANCE HOLDINGS LTD 54
CONTINENTAL REINSURANCE COMPANY LTD 57
EMERITUS REINSURANCE COMPANY (PTY) LTD 59
FIRST NATIONAL INSURANCE AGENCY (PTY) LTD 61
FMRE PROPERTY AND CASUALTY (PTY) LTD 62
GETBUCKS LTD 64
HOLLARD INSURANCE COMPANY OF BOTSWANA (PTY) LTD (THE) 66
HOLLARD LIFE ASSURANCE COMPANY OF BOTSWANA (PTY) LTD 68
LETSHEGO HOLDINGS LTD 70
LIBERTY GENERAL BOTSWANA (PTY) LTD 74
LIBERTY LIFE BOTSWANA (PTY) LTD 76
METROPOLITAN LIFE OF BOTSWANA LTD 78
OLD MUTUAL FINANCIAL SERVICES BOTSWANA (PTY) LTD 80
PHOENIX OF BOTSWANA ASSURANCE COMPANY (PTY) LTD 82
SESIRO INSURANCE COMPANY (PTY) LTD 84
STANBIC BANK BOTSWANA LTD 86
STANDARD CHARTERED BANK BOTSWANA LTD 90
SUNSHINE INSURANCE COMPANY OF BOTSWANA (PTY) LTD 94
WESTERN INSURANCE BOTSWANA (PTY) LTD 96
WESTERN LIFE INSURANCE BOTSWANA (PTY) LTD 98