By William Kumwembe:
Malawi continues to be ranked poorly in terms of insurance penetration, trailing at the bottom of the ladder when compared to regional counterparts.
Figures from the Reserve Bank of Malawi (RBM) show that insurance penetration rate now stands at 2.01 percent, up from 1.4 percent recorded in January 2018.
However, the rate is still low compared to South Africa’s penetration rate of 16 percent, Namibia’s 6.9 percent and four percent each for Zimbabwe, Mauritius and Lesotho.
Industry captains have been blaming economic hardships that Malawi has been facing for the situation, saying the situation has been negatively impacting the sector as it is struggling to grow.
For instance, as at December 2018, the number of lives covered under life insurance policies stood at around 428,000 for the whole country out of an estimated population of 17.5 million.
Aggregate gross premium for life insurance was at K29.7 billion while General Insurance was at K47.6 billion.
However, out of the total business underwritten by General Insurers, about 60.0 percent originated from the motor class of insurance business, which is mandatory for vehicle owners as per the Road Traffic Act.
Speaking when opening the inaugural Insurance Awareness Week in Blantyre Monday, RBM Governor, Dalitso Kabambe, conceded that growth of the insurance industry had been slow despite numerous efforts.
“Although these statistics are in no way flattering, they also indicate that there is significant potential for the insurance industry to increase its contribution to the country’s economic growth.
“However, to achieve that, the insurance industry needs to be proactive and relentless in devising innovative ways of developing the market,” Kabambe said.
Kabambe blamed low literacy levels for the situation.
Results of the Malawi Financial Literacy and Consumer Protection Household Follow-up Survey that was conducted in 2018 showed that as much as 67.3 percent of the population does not know what insurance means.
Insurance Association of Malawi President, Donbell Mandala, said there were opportunities for continued growth of the penetration rate in the local insurance industry.
“We totally agree that 2 percent is low but you can imagine that in 2017 the insurance penetration rate was at 1.4 percent. So, we have grown by more than 50 percent to 2.01 percent. Our target is that we should continuously grow because opportunities are there,” Mandala said.
Organised by industry players, the Insurance Awareness Week is aimed at intensifying dissemination of insurance-related messages to the public.