What happens when an insurer is asked to cover a risk it cannot properly see?
Usually, it becomes more cautious. It may charge more, restrict the cover available or decide that the business cannot be written at all.
That simple problem sits behind part of Africa’s insurance protection gap. But insurers need reliable information about the risks they are being asked to take on. In many African markets, that information is incomplete or inconsistent.
The Africa Insurance Pulse 2026 describes the continent’s protection gap as partly a data gap. the report emphasises that high-quality insurance and reinsurance data is critical to the market’s continued evolution. All 17 organisations who contributed to the Pulse rated high-quality insurance data as critical to their business strategies, yet none said they were using every data source available to them.
Agriculture brings the issue into sharp focus. Around 95% of African agriculture is rainfed, while the agricultural insurance protection gap is estimated at 97%. For smallholder farmers and agribusinesses, drought and flooding have immediate consequences, yet can be difficult to insure.
Farms may be widely dispersed. Claims histories may be limited or absent. Physical loss assessments can be slow and costly. In those circumstances, the conventional insurance model begins to struggle.
Satellite imagery, weather observations and geospatial information offer a different view of the risk. They can reveal patterns of rainfall, vegetation and exposure that are otherwise difficult to establish. They can also support parametric insurance, where an agreed measure triggers payment without a conventional assessment of every individual loss.
Pula’s shortlisting as a 2026 Earthshot Prize finalist shows what this can look like at scale. The company uses trained field teams, field data and satellite insights to track crop performance across farming areas and compare it with historical averages. Through Area Yield Index Insurance, payouts are triggered for insured farmers when harvests fall below an agreed threshold because of a covered climate risk.
Crucially, Pula embeds cover into services farmers already use, including government support and farm loans, rather than relying on a separate purchase. The Earthshot Prize says the model has reached 24 million farmers across Africa, protected more than US$2.8 billion in farming investment and paid US$136.5 million directly to farmers. It shows how better evidence, sensible product design and established distribution can work together. That matters because a faster, predictable payment can help a farming household replant, recover and avoid a deeper financial shock.
There are obvious attractions to the parametric model, but technology should not be confused with a complete solution. A cleverly designed product achieves little if people cannot afford it, do not understand it or do not trust that it will respond when needed.
Distribution matters too. In several low-income African markets, mobile money has reached much further into the population than conventional banking. That creates a route to customers insurers have struggled to reach. Used responsibly, mobile-led financial data could help insurers understand customer behaviour and design products for households and small businesses that conventional underwriting has struggled to assess.
Customers need to know what information is collected and how it will be used. Data must be accurate, representative and properly governed.
Then there is the question of people.
The African Development Bank has identified shortages in the human, technical and institutional capabilities needed to develop climate-insurance solutions. These include data analytics, risk modelling and pricing, alongside regulatory expertise that can support innovation without weakening customer protection.
Investment in data and technology must be matched by investment in professional capability. Otherwise, firms may acquire better tools without developing the confidence or judgement needed to use them well.
Comparable market histories show that firms, regulators, reinsurers and industry bodies need to work together to effect change. The African Insurance Organisation’s work to develop an African Insurance Data Repository is worth watching. A shared evidence base could identify trends and emerging risks, and demonstrate insurance’s value to policymakers. And it may help attract capital, since international reinsurers and investors are more likely to engage with risks they can understand.
Africa does not lack risk that needs insuring, nor demand for greater financial resilience. The harder question is whether insurers, regulators and the wider profession can build the information and capability needed to convert that demand into sustainable protection. Better data will not close the protection gap by itself. It may, however, make rather more of that gap possible to close.
