Kagame was speaking Monday at Federation of African National Insurance Companies (FANAF) general assembly that took place in Kigali.
According to the World Bank, services are the fastest-growing segment of the global economy, already accounting for 70% of output and 60% of employment.
The Head of State said that insurance services are an important part of that picture.
Kagame underlined that beyond compensation for misfortune, insurance contribute to development programmes.
“Insurance does much more than compensate for misfortune. The more advanced an economy, the greater the size, diversity, and efficiency of its insurance market. Indeed it is fair to say that insurance underpins prosperity and innovation,” he said.
He said that insurance products allow investors and entrepreneurs to take risks.
By using an example of United States, he said that around one-third of corporate debt is financed by insurers adding that insurance facilitates the growth of trust over long distances, “without it cross-border trade would grind to a halt,”
“As insurance companies invest customer premiums, they mobilise savings toward domestic investment increasing the size of feasible projects in the national economy. The very nature of the insurance business requires firms to take a longer-term perspective in their lending, than commercial banks are able to do,” he said.
Kagame said that it is critical for the structural transformation of African economies.
“Moreover, by giving a price to various forms of risk, insurance helps us to detect hidden dangers and plan accordingly. This means fewer deaths in fires and floods, safer roads and buildings and less crime,” he said.
Where does Africa insurance stand?
He said that one out of every six people on the planet, is an African, nearly 17 per cent. He said, Africa generates only 1.5 per cent of global insurance contracts, around 75 billion dollars, as of a few years ago.
Around three-quarters of that comes from South Africa. The rest of the continent combined, accounts for less than one-half of one percent of the world market.
“I think this has to change and you are the ones to change it,” he told participants.
The annual revenue of each of the top fifteen international insurance conglomerates, has generally exceeded the total value of Africa’s insurance market.
“Banks and capital markets everywhere, including in Africa, have moved quickly to integrate new technologies. This has greatly expanded access to financial services, especially in the informal sector. But insurance has been slower to adopt these innovations, and it is important to catch up,” he said.
Africa’s insurance opportunities
He observed that though statistics for Africa’s insurance are unattractive, there is a huge opportunity for future growth particularly as Africa’s middle class expand faster.
“Africa’s national insurance companies, represented by all of you here, will be the drivers of that expansion as well as the natural partners for international firms looking to enter our market,” he said urging Africans to work closely.
He said that another opportunity is that the barriers hindering the growth and scale of trade in Africa are about to get smaller.
He reminded that the agreement on the Continental Free Trade Area will be signed in Kigali next month, at an Extraordinary Summit of the African Union.
“This is a historic pact which has been nearly 40 years in the making and it represents a major advance for African integration and unity, part of the Continental Free Trade Area, is a Protocol on Trade and Services and that includes the insurance sector,” he noted.
He said that the progressive liberalisation expected in the future will mean new opportunities for African firms to compete and cooperate across borders and build continental reach.
He called on participants to provide active support throughout the ratification and implementation Continental Free Trade Area.