Recently, the country’s largest diversified financial services group, Botswana Insurance Holdings Limited (BIHL), attributed the sustained trend of low insurance penetration levels to a rise in consumerist behaviours like betting and gambling. Executives said the trend shrinks disposable income available for long-term savings and priorities, in search of short-term financing gains. Announcing the group’s half-year performance recently, BIHL CEO Catherine Lesetedi said that the number of people getting insurance cover for their assets and livelihood is experiencing little growth due to the explosion in consumerist behaviours like online betting and high retirement cash-outs.
“We have seen stagnant insurance penetration levels in the industry due to a rise in consumerist behaviours like gambling,” she said. “This means that people are not prioritising long-term savings and are rather prioritising short-term expenditure.” As people prioritise spending on immediate consumption like betting, fashion, electronics, travel and others, they allocate less money towards long-term financial products like life insurance, retirement annuities, or health cover. This directly shrinks the customer base and premium inflows for insurers. Attesting to this trend, BIHL noted increased lapses or defaults in payments of insurance premiums as consumers prioritised other forms of expenditure, whilst defaulting on subscription-based saving plans like insurance. Often, when disposable incomes become constrained, individuals will tend to prioritise immediate consumption over long-term financial planning. This shift in priorities leads to a preference for immediate gratification, often at the expense of securing life insurance policies. Consequently, policy lapses have become more prevalent, undermining the stability of the insurance sector. “We are seeing lapses and delays in the payment of premiums, largely because disposable incomes are under pressure.
