Weather index insurance Key to penetration rate

 Nico General Insurance Company Limited says weather index and agriculture insurance remains key to boosting the country’s insurance penetration which remains at below three percent.

In an interview on Saturday in Lilongwe on the sidelines of a Brokers Fun Day, Nico General Insurance Company Limited chief executive officer Donbell Mandala said insurance penetration also depends on people’s disposable income.

But he said with the Covid-19 pandemic, people regard insurance as a luxury when it is a necessity.

Mandala said: “Insurance penetration remains a challenge in the country, three years ago we were at 2.5 percent, meaning insurance is not well covered across Malawi.

“There is some good news because we are now able to cover farmers with weather index insurance. Last year, we covered about 72 000 farmers and we believe that if we improve on growing weather index and agriculture insurance, penetration is going to improve.”

He said the insurance business in general has been tough largely due to the impact of Covid-19

Mandala said the company’s premiums have grown by 11 percent, which is above inflation rate currently at 8.9 percent.

“Our growth at 11 percent is above the market which grew by nine percent. Therefore, we are happy with what we have achieved in 2021,” he said.

Mandala said going forward, they are hopeful that business will recover in 2022, adding that they have learnt to live with Covid-19 and they expect growth through enhanced distribution channels.

He said the company is looking at digitising its channels to save money and be able to serve customers while they are remotely connected to the company.

Insurance Brokers Association of Malawi president Clement Ndala said despite the pandemic, brokers continued to work hard to sell premiums.

He said brokers will intensify aggressive marketing to ensure that apart from making business, insurance penetration should improve.

In South Africa, the insurance penetration rate was 16.99 percent in 2017, which was the highest in sub-Saharan Africa. South Africa was followed by Namibia, Lesotho, Mauritius and Zimbabwe, which had insurance penetration rates ranging between four and seven percent.

Available figures show that in Southern African Development Community, South Africa has the highest insurance penetration rate at above 16.99 percent, trailed by Namibia, Lesotho, Mauritius and Zimbabwe which have penetration ranging between four and seven percent.

Insurance penetration refers to the ratio between the value of premiums written in a particular year in a particular country to the gross domestic product of the respective country.

Most countries in sub-Saharan Africa have lower than average insurance penetration rates, when compared with other parts of the world.

Experts say the low penetration is due to the fact that the African insurance industry is still in its infancy, premiums are financially out of reach of many people and financial literacy is relatively low.