The insurance sector is undergoing significant change, presenting both opportunities and challenges driven by new regulatory requirements, increased competition, technology, and innovation. These factors will pressure new business models in the short and medium term. Solid growth, with values above inflation, is necessary.
For 2025, consultants and market operators point to challenging perspectives, highlighting both challenges and opportunities for the insurance sector. José Correia de Araújo, executive director of ASAN, predicts that it will be a very challenging year due to factors related to the economic development, the financial health of policyholders, especially companies, the evolution of financial markets, inflation, exchange rate fluctuations, and the oversight of mandatory insurance. In general, the expert expects 2025 to be the year when the market finally starts to grow consistently above inflation, as was seen in 2023.
Regarding investment priorities, he highlights the development of distribution channels, recruitment and training of human resources, and information systems, particularly for implementing the growing regulatory requirements and a new chart of accounts that will include IAS/IFRS, as well as a new way of accounting for costs that will require significant investment in developing highly detailed analytical accounting systems.
For Paulo Brancos, strategic insurance consultant, the market’s continued growth below inflation suggests that 2025 will not be the best year for the sector.
“As far as I know, the insurance sector, until November, grew close to 25%, while inflation was at 27.5%. If we exclude the petrochemical and health sectors (remember that, in health, the main component is not risk, it’s consumption—ambulatory assistance/exams/etc.), the growth will be below 17%, meaning we have a real negative growth in premiums. If this trend continues, the prospects won’t be the best,” he says.
On the other hand, the consultant notes an expected increase in competition, which was already seen in 2024. However, it’s important that this competition is governed by healthy competition rules, and he emphasizes that lawmakers continue to equip the insurance sector with modern legislation, following the implementation of the new law in 2022, especially in terms of ensuring equal competitiveness among insurers in the sector.
“From an organizational standpoint, insurers should continue to reinforce various components of the Legal Framework of the Insurance and Reinsurance Activity, particularly in actuarial work, internal controls, market conduct, preparation for IFRS standards, analytical accounting (cost detail), and for the upcoming legislation on the Insurance Contract Law.”
With the possible launch of the national reinsurer, Bracons reiterates that insurers must prepare for this new reality. However, they shouldn’t set overly high expectations, as there are risks in Angola’s property and petrochemical sectors that could reach $500 million to $1 billion, and the reinsurer will have a capital in Kwanza equivalent to only $20 million to $30 million USD.
Nevertheless, insurers should have coherent strategies and balanced views of their insurance portfolios. The health and petrochemical sectors should not represent more than 30% to 35% of the total, but they represent over 50%. Therefore, the solution is not to reduce volumes in these two important business lines but to grow the automobile, work accidents, multi-risk, and civil liability lines. There’s also an alert for the surety branch, which is growing too quickly.
The president of the Angolan Actuaries Association (AAAT), Henda Mondlane da Silva, expects 2025 to be a year characterized by continued growth in the insurance sector (in the order of double digits, as seen in the past two years), greater adherence to mandatory insurance, resulting from literacy actions promoted by various sector participants, and increased supervision by competent authorities.
Gerson Silva, technical director and reinsurance of Stas Seguros, points out that inflation will represent a major challenge to growth, as national/local service providers have updated their price tables, and as a result, bills to insurers from these providers have significantly increased, impacting internal revenues.
Artificial Intelligence
As Artificial Intelligence is being implemented across various sectors, operators argue that AI and Generative AI are essential in the financial sector and, particularly, in insurance. AI and the associated digital transformation processes are vital for the future of the sector. However, for AI to produce the best results, it is essential to improve the quantity and quality of the data insurers have, both at the policy and client levels.
Source: Expansão
