Reserve Bank of Malawi challenges insurers on efficiency
The Reserve Bank of Malawi (RBM) has challenged insurance companies to efficiently manage their expenses so as to give significant returns to their shareholders.
RBM Director of Pensions and Insurance Supervision, Chimwemwe Kachingwe, said this in Blantyre on Thursday during a dinner gala Nico General hosted for its brokers.
Kachingwe said, overall, the industry appears to be on the right path despite registering low pre-tax profits.
Figures from the central bank indicate that, as at end September 2017, gross premium income in the sector amounted to K33 billion compared to K28 billion written during the corresponding period last year.
The amount is slightly lower than the K35 billion registered in 2016.
Kachingwe said the premium revenue is likely to significantly surpass last year’s revenue and the industry is expected to grow.
However, according to Kachingwe, the growth does not translate to profitability for the industry.
For instance, combined pre-tax profit for the year to September amounted to K2.7 billion compared to K2.8 billion made during the same period in 2016, and K3.4 billion reported for the whole of last year.
Kachingwe then pointed out that the industry has been adversely affected by high management expenses as evidenced by the management ratio of 38.9 percent in September 2017.
“There is need for insurance companies to manage their expenses in order to report and provide meaningful profit and returns to their shareholders,” she said.
Nico General Chief Executive Officer, Donbell Mandala, pointed out key risks facing the sector, including high cost of doing business which, he said, is affecting most players.
Mandala further said, in the recent past, there has been deterioration in skills among sector players due to financial crises, saying there is a need for skills development.
“However, the challenges have to be overcome and the sector will remain resilient,” Mandala said.
During the event, Nico General presented awards to some of its brokers for their outstanding performance in the year.