Insurers warned against price undercutting
National Bank of Malawi Chief Executive Officer, George Partridge, has warned insurers against price undercutting as one way of surviving in the highly competitive market.
Partridge was speaking in Mangochi on Friday, when he delivered a keynote address during the 2016 Insurance Institute of Malawi (IIM) Annual Conference held under the theme ‘Delivering the Promise’.
Partridge’s comment comes at a time when a number of players in the industry are pricing their insurance products at a very low price as one way of attracting customers.
The NBM chief said insurers need to compete on the quality of service offered and not on price.
He observed that by pricing their premiums lowly to outwit the competition, the insurers are just digging their own grave as they would not be able to settle insurance claims once they are made.
“This is very risky because when time comes to settle the claims the insurers will not have the money to pay the people, hence failure to deliver their promises,” said Partridge, who is also United General Insurance (UGI) Board Chairperson.
He observed that, although the industry appears to be growing in nominal terms, real term figures for the past five years has shown that the industry is shrinking.
Partridge said the growth of the industry has been below inflation, adding that the claims ratio is growing exponentially.
He further noted that with insurance penetration at three percent, the industry has plenty of room for growth.
The conference attracted over 130 insurers from all insurance companies in the country, including the regulator, Reserve Bank of Malawi.
Making a presentation during the conference, veteran insurer and former Nico Holdings Chief Executive Officer, Felix Mlusu, urged the insurers to continue studying so as to master their skills.
He also advised the insurers and insurance firms to be ambitious and always aim to move a step up on the ladder.
During the conference, Mlusu received a top honour from IIM for his contribution towards the development of insurance in Malawi over the past 41 years.
IIM president, Immaculate Kachapira, described this year’s annual conference as a success, saying it has given the industry players a lot of food for thought in as far as the growth and development of insurance is concerned.