Djibouti’s insurance market has made progress in recent years. The sector finished 2022 with four insurance players, up from the two operating in the market in 2021, and additional competitors are considering their own entry. The authorities expect the new players to help stimulate innovation and increase insurance penetration. Although transport and shipping activities have driven economic growth, the diversification of the country’s revenue is opening up potential for new insurance products over the medium term.

Despite the emerging opportunities, insurance penetration was just under 1% of GDP at the end of 2022, according to the Ministry of Economy and Finance, in Charge of Industry (Ministère de l’Economie et des Finances, Chargé de l’Industrie, MEFI), which oversees the sector. Raising awareness of insurance products and structuring offers suited to Djibouti will be key objectives for the sector in the coming decade.


The sector has seen total premium progress at a consistent pace over the last decade. After totalling DJF2.4bn ($13.5m) in 2010, insurance premium had expanded to DJF3.3bn ($18.6m) by 2016. Although the onset of the Covid-19 pandemic resulted in GDP growth moderating to 1.2% of GDP in 2020, the economic recovery that took place during the following year had a direct impact on the sector’s premium levels. With the economy growing by 4.8% in 2021, the insurance sector saw total premium increase by 19.7% to reach DJF4.6bn ($25.9m).

Although several insurance segments have demonstrated growth potential, activity in the sector is oriented primarily around automotive insurance, which accounted for 55% of premium, or a total of DJF2.5bn ($14.1m), in 2021. However, the auto segment’s weight has progressively decreased, dropping from 62.6% of premium in 2016 to 60% in 2020. Nevertheless, the segment is expected to remain a significant contributor to global premium for the foreseeable future, since third-party liability coverage is still compulsory.

Because of its weight within the sector, the authorities have implemented regulations to secure the auto segment’s solvency and prevent excessive losses from accumulating. A minimum tariff on automotive insurance premium was implemented in 2021 to counter under-pricing. In order to attract more customers and reward good behaviour, regulators have also introduced a discount on premium for the safest drivers.

The second-biggest insurance segment in 2021 was other risks and direct damages, which brought in 19.5% of total premium, or DJF890.8m ($5m). Sector profits reached DJF677.6m ($3.8m) that year, an 8.9% increase relative to 2020. Financial profitability improved from 36% to 37% in 2021, according to the MEFI. Total insurance claims increased by 11% to DJF1.2bn ($6.8m), putting the claims-to-premium ratio at 27.4%, down eight percentage points relative to 2020. “The market remains small but profitable,” Aden Salah Omar, director for economy at MEFI, told OBG.

Rising Competition

After years of operating with only two local insurance companies in the country – GXA Assurances and Assurance AMERGA – the authorities approved the arrival of two new insurers to increase competition and boost the penetration of insurance services. Domestic player Tamini Insurance began operating in 2021, followed by Kenya’s African Takaful Insurance Company in May 2022. Both offer Islamic insurance products, which are likely to resonate with underserved parts of the population.

Despite the sector’s rising prospects, the current macroeconomic environment will present some obstacles over the short term. Market penetration might be hampered by persistent inflationary pressures in 2023, which is expected to reduce household income and impact the liquidity of businesses. Even so, the sector’s long-term prospects are likely to be buoyed by an expanding and diversifying economy, and the growth potential resulting from new product offerings and substantial room to increase insurance adoption.