Steady growth of Madagascar insurance market

Mashrukh Khan: Madagascar’s insurance market posted steady though modest expansion in 2025, with gross written premiums estimated to have reached approximately 420 billion Malagasy ariary (around USD 85 million), reflecting an 8-10 percent year-on-year increase driven largely by compulsory motor coverage, emerging agricultural and parametric products, and gradual diversification into health and property lines. While the sector still accounts for only about 0.7 percent of national GDP and remains one of the smallest in Africa, early 2026 indicators point to continued moderate growth of 7-9 percent amid economic recovery, rising vehicle registrations, and heightened awareness of climate-related risks. Non-life business continues to dominate with an estimated 85 percent share, while life and health segments, though smaller, are showing signs of expansion through employer-sponsored schemes and micro-insurance initiatives.

Life insurance offerings include term, endowment, whole life, group life, credit life, and savings or retirement plans aimed at providing death benefits, retirement support, and critical-illness coverage for an increasingly urbanising population. Non-life products encompass mandatory motor third-party liability (RC Auto) alongside comprehensive options for accidents, theft, and own damage; property and fire insurance protecting buildings and contents against fire, storms, floods, cyclones, and other natural perils (often with compulsory catastrophe extensions in high-risk zones); health supplements; liability; marine and aviation; engineering; personal accident; workers’ compensation; surety bonds; and growing micro-insurance and parametric covers tailored to smallholder farmers and vulnerable communities.

Mandatory insurances require motor third-party liability for all motorised vehicles, covering bodily injury, death, and property damage to third parties, as well as workers’ compensation in most employment sectors and professional indemnity for insurance brokers. Property insurance against natural disasters is increasingly emphasised in cyclone- and flood-prone areas, while private health and comprehensive covers remain largely voluntary but are gaining traction through corporate wellness programmes and innovative index-based solutions.

Clauses are governed by the Insurance Code and oversight from the Ministry of Economy and Finance, in coordination with the Central Bank of Madagascar (Banky Foiben’i Madagasikara) and the emerging supervisory framework under the Insurance Supervisory Service. Regulations enforce the principle of utmost good faith, full pre-contract disclosure of material facts, and clear policy wording. Non-disclosure or misrepresentation may lead to reduced payouts or policy voidance, with ambiguities generally interpreted in favour of the insured and regulated timelines for claims settlement strictly enforced.

Exclusions commonly apply to intentional acts, war, nuclear events, gradual wear and tear, and unendorsed perils. Policies clearly outline covered risks, the insured’s duty to mitigate losses, and prompt claim notification procedures. Claims predominantly stem from motor accidents (driven by road conditions and rising vehicle numbers), property damage from cyclones, floods, and storms, health-related treatments, and liability events. Motor and property/casualty lines account for the bulk of payouts, with paid claims rising in line with premium growth. Denials typically result from non-disclosure, late notification, policy exclusions, suspected fraud, or incomplete documentation.

Premiums are determined through risk-based assessment under heavy regulatory scrutiny on compulsory lines. Motor third-party liability tariffs have seen periodic adjustments to address portfolio deficits, while comprehensive and property rates factor in vehicle or asset value, driver history, location, and exposure to perils (notably higher in coastal or flood-vulnerable regions). Health and life premiums are linked to age, sum assured, and health status. No-claims bonuses are available in several lines, though inflation, claims pressure from climate events, and low overall volumes continue to influence rate movements. Recent innovations, including parametric drought and flood covers underwritten through international risk pools, have helped stabilise pricing in agriculture.

Claim values range from modest motor repairs or small thefts amounting to a few hundred thousand ariary to major aggregates from serious accidents, large-scale property damage, or catastrophic events reaching hundreds of millions or even billions of ariary, always subject to policy limits and compulsory indemnity caps. The market is regulated primarily by the Ministry of Economy and Finance through the Insurance Supervisory Service, with most players being domestic or regionally backed insurers holding the bulk of the market. Private and foreign participation remains limited but is gradually increasing, as seen with new entrants such as VIA Assurance from the AXIAN Group and AFG Assur Madagascar.

Challenges persist, including heavy dependence on motor insurance (nearly half of non-life premiums), extremely low overall penetration, a large uninsured adult population (estimated at 92 percent), outstanding claims accumulation, and vulnerability to economic volatility and frequent natural disasters. Yet significant opportunities lie in under-exploited lines such as agricultural and parametric insurance, micro-insurance for the informal sector, health products, and digital distribution channels that could deepen market penetration and support broader financial inclusion.