The Reserve Bank of Malawi (RBM) has not renewed a business licence for Swift Insurance Brokers and Consultants, Business News has learnt.
RBM Governor Charles Chuka, in a notice paste on the central bankâ€™s website, says he has made the decision because of Swift Insuranceâ€™s failure to comply with provisions of the Insurance Act and RBM insurance directive of 2011.
The insurance industry is regulated by the Insurance Act which empowers the Registrar of Financial Institutions, who happens to be RBM Governor, to carry out ongoing regulation and supervision of its entities.
â€œMembers of the general public are hereby informed that the licence of Swift Brokers and Consultants Limited to conduct insurance brokerage business has not been renewed by the Registrar of Financial Institutions,â€ says Chuka.
In the notice, he says the insurance broker contravened provisions of the Act and the RBM Insurance Directive, especially on collection and payment of insurance premiums.
â€œAs such, members of the general public are advised to note that Swift cannot transact insurance brokerage business until further notice,â€ he says.
Swift Insurance Company general manager Penwell Nkhwazi could not be reached on Tuesday for comment as he was reported out of the office, according to an employee who refused to be identified.
Efforts to talk to RBM spokesperson Ralph Tseka also proved futile, but a source at the central bank confided in that recent directives by RBM have sent shivers in the insurance industry.
â€œFor instance, prior to the premium payment directive, insurance brokers used to enjoy a 30-day premium custody and this provided an opportunity for most brokers to grow their investment before the funds were remitted to insurers. But with the new law, this is not the case and most brokers are finding the going getting tougher,â€ said the source.
RBM issued the directive on the collection and payment of insurance premiums on August 1 2011.
The source said insurance players who choose not to comply with the provisions are punished through payment of pre-determined sums of money or have their licences revoked.
Recently, RBM issued four new directives on transacting insurance business and they include directives on risk management, fit and proper persons, corporate governance and premium payment.
Local insurance experts argue that the directives are meant to close loopholes in the sector and clear excess market failures and imperfections that have been dogging the insurance industry for many years.