Low insurance penetration worries Reserve Bank of Malawi
By Khumbo Kaliwo:
The Reserve Bank of Malawi (RBM) has said it is not impressed with the low levels of insurance penetration on the market, saying the development hampers economic growth.
RBM has since described the devastating Tropical Cyclone Freddy as a wake-up call for businesses to get protective mechanisms such as insurance cover.
RBM Executive Director Responsible for Regulations, Patrick Mhango was speaking in Lilongwe on Monday during the launch of the 2023 Insurance Awareness Week.
Mhango has since urged players in the insurance industry to educate the masses on the importance of insurance.
“We want the insurance operators to engage their audience during this awareness week and inform them that insurance is a critical component for any thriving economy and that it is a catalyst for development.
“The natural disasters that have been battering our lives during the recent years should be a wake-up call to all of us,” Mhango said
Insurance Association of Malawi President Abdul Mageed admitted that, this year, the industry has witnessed a hardening reinsurance market where the cost of reinsurance has significantly gone up due to catastrophic events occurring across the world.
Mageed, however, said they have introduced new products on the market which will enhance penetration, adding that they will use the awareness week to inform their audience.
“Just like we did in 2019 in Blantyre, this week we will speak one language, and that is teaching the masses about insurance.
“The practice of competing in undercutting the premium rates from 12 percent to 5 percent, from 5 percent to 1.5 percent, from 1.5 percent to 0.75 percent can’t be termed as new business growth, it isn’t.” he added
Mageed revealed that, very soon, they will be replacing the current insurance certificate with a digital one.
He said the digital certificate will not only assist in curbing fraud, but will also enhance collaboration with other key stakeholders like the Department of Road Traffic, the Malawi Revenue Authority and the Malawi Police Service.
“These stakeholders will be able to exchange instant data on number of vehicles imported, those that have paid duty and those that are insured.
“Any stolen motor vehicle, as long as it is within the borders of the country and want to access any of these services, will easily be flagged,” he added.
The theme for this year’s awareness campaign is ‘Make the Right Choice, Get Insured’.