Policymakers warned on May 4 that persistently low coverage levels are leaving millions of people without adequate protection vulnerable to climate shocks, disasters and economic losses.

Insurance penetration across Africa remains at 2.7 percent, well below the global average of about 7 percent, a gap he attributes to growing structural weaknesses in the continent's financial resilience.

The call was made in Kigali during the annual meeting of ZEP-RE (PTA Reinsurance Company), a regional reinsurer owned by member states of the Common Market for Eastern and Southern Africa (COMESA), where government officials, regulators and industry leaders gathered to consider the state of Africa's insurance sector and its role in strengthening economic resilience.

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Soraya Hakuziaremi, Governor of the National Bank of Rwanda (BNR), said the insurance gap is more than statistics, warning that it directly translates into human vulnerability when disasters strike.

He said, “We must treat insurance not as a niche financial product, but as a strategic tool for economic resilience, fiscal sustainability and inclusive growth. Climate and economic shocks are no longer isolated events, but have become a recurring reality shaping livelihoods across the continent.”

He said, “These shocks are no longer rare events, they are part of our new normal, hitting households, farmers, businesses and governments when they are least prepared. When disaster strikes, millions of people are left with nothing. This is a gap we must urgently close through stronger, more inclusive insurance systems.”

Africa faces increasing climate-related disasters, including floods, droughts and storms, which have repeatedly disrupted livelihoods in many countries and reversed development gains.

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Hakuziaremi highlighted that Rwanda is one of the countries that is deliberately integrating insurance into its long-term development strategy through a 10-year National Insurance Roadmap, which prioritizes digital transformation, risk pooling, customer-centric product design and climate-related financing mechanisms.

According to Hope Murera, managing director of ZEP-RE, Africa's response to disasters often follows a costly cycle where governments step in to rebuild infrastructure, restore services and support recovery, while subsequently accumulating long-term debt.

He said, “In our continent, when disasters strike, governments step in to rebuild roads and repair hospitals. Farmers try to recover from losses, but in many cases, this recovery comes at the cost of costly debts that persist long after the disaster has passed.”

The most affected groups, smallholder farmers, small businesses, women and youth, are largely excluded from formal protection systems, he said, adding that the insurance industry must urgently address this gap.

Murrera warned that climate-related risks were becoming more frequent and severe, arguing that insurance should play a stronger role in absorbing shocks and protecting economies.

“Insurance must play a stronger role in capital markets by absorbing shocks and de-risking economies. Yet penetration remains low, and access is still fragmented and inaccessible in many parts of the continent,” he said.

Innovation takes shape

Murera pointed to the Horn of Africa as an example where innovation is beginning to reshape risk protection, particularly through index-based livestock insurance supported by development partners.

“In the Horn of Africa, pastoral communities had no protection when drought struck. Today, through index-based insurance, they can receive payments even before the full effects of the drought are felt, not as aid, but as policyholders,” he said.

Murera emphasized that such innovations are only possible through partnerships between governments, regulators, insurers and development institutions.