Conglomerate Press Corporation plc acting chief executive officer Lyton Chithambo has challenged insurance firms to develop innovative products to make insurance relatable and utilised by many people.
He made the call in Blantyre on Saturday during the Insurance Institute of Malawi (IIM) Annual Insurance Charter Dinner against a backdrop of the country’s low insurance penetration stuck at less than two percent over the past two decades.
While urging the industry to enhance professionalism and standards to attract more people, he told industry players to rise to the challenge by ensuring it boosts its relevance and presence.
Said Chithambo: “When you look at our country, most of the population is uneducated and most businesses are informal.
“If you operate in that environment and you do not want to take risks and make innovative products, then the majority of people will remain uninsured.”
He called on the insurance practitioners to be flexible to woo as many people as possible, adding that the sector has been around for 44 years, but its relevance and presence remains minimal.
Newly elected IIM president Hastings Kapesa admitted that insurance penetration is low, with gross written premiums to the gross domestic product (GDP) at two percent, a situation he said calls for a re-look at the way the sector is operating.
He said: “The industry appears to be young, but it has grown old. It is like a baby that is not growing but has grown grey hairs.
“Part of this solution could be innovation, maximising use of technology, aggressive awareness campaigns of insurance products and lobbying institutions, even government institutions, to start insuring their properties.”
Malawi’s insurance penetration rate, the ratio between the value of premiums written in a particular year in a particular country to GDP, does not compare favourably with peers such as South Africa, Namibia, Zimbabwe, Mauritius and Lesotho.
In South Africa, for instance, insurance penetration rate was 16.99 percent in 2017, the highest in sub-Saharan Africa.
South Africa is trailed by Namibia, Lesotho, Mauritius and Zimbabwe, which had insurance penetration rates ranging between four and seven percent.
In its Financial Stability Report for December 2021, the Reserve Bank of Malawi said the insurance sector was financially sound in the six months to December 2021 as majority of general insurers maintained adequate capital, posted profits and had satisfactory asset quality despite continued weak liquidity in majority of insurers.
It said overall financial condition of the sector is expected to improve, on account of expected growth in earnings and continued efforts by the registrar’s office to address identified and emerging weaknesses.
Experts say the low penetration is due to the fact that African insurance industry is still in its infancy, premiums are financially out of reach of many people and financial literacy is relatively low.
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