The Reserve Bank of Malawi (RBM) has challenged insurance professionals to be innovative and embrace change or else make their profession die a natural death.
RBM Deputy Governor William Matambo said this on Friday in Mangochi during the 2022 Insurance Institute of Malawi (IIM) Ninth Annual Lakeshore Conference held under the theme ‘A glance at insurance in Malawi in the next decade’.
He said today’s insurance model is unsustainable, as such, there is need for new ways to make it viable and thriving.
Said Matambo: “The insurance industry has better days ahead. Just like other businesses in the financial services sector, there is potential of business in the sector.
“But what is needed as professionals is to be innovative and embrace changes of doing businesses otherwise prepare to perish or remain irrelevant in the next decade.”
He challenged insurance practitioners to acquire necessary skills of conducting business and to fashion out strategies or mechanics of surviving in the next decade.
Said Matambo: “The insurance business just like most other businesses will be greatly affected by the events that are happening around us and most of them will be measured by the rate at which the world is digitising.
“The traditional way of insuring things will have to change to accommodate the changes that are coming across with digitisation. There is need to embrace new things.”
He said the insurance business has been resilient in the face of the Covid-19 pandemic and registered remarkable strides, but lamented low penetration of insurance, which is stuck at less than two percent.
“Penetration of insurance in the country is relatively low. This is worrisome to the country, especially now when we have so many problems induced by climate change,” said Matambo.
In his remarks, IIM president Hastings Kapesa said the two percent insurance penetration is a cause for concern and has haunted the insurance industry for a long time.
“If you look at this figure, it is like a baby who has grown grey hair but that baby, physically is not growing,” he said.
Kapesa commended RBM for challenging them to be innovative in their spheres of work, promising to triple their efforts to maximise the potential found in the sector, including growing the penetration rate to at least five to 10 percent in the next decade.
In the 2021 Financial Institutions Supervision Report published in September, RBM indicated that the insurance sector performance continues to be burdened with credit and liquidity vulnerabilities despite being adequately capitalised, solvent and profitable.
The RBM said the claims ration in the general insurance sector increased to 60.3 percent in 2021 from 55.1 percent in 2020.