Despite the local insurance industry being highly regulated, the country’s market is less competitive because risk carriers are fewer than the insurable populace, an analyst has said.
Duncan Bvomerani, a fellow of the Chartered Insurance Institute (CII) of London and GISC Insurance Career Centre programme director , said in an interview Wednesday that the main challenge in the insurance sector is asymmetric information, which denies policyholders contractual right to access necessary information that encompasses the insurance contract.
He said: “As a consequence of information asymmetry, policyholders are unaware of when to make a claim, which aspects of cover are covered or not, who to contact to make a complaint and when and how to refer unresolved complaint to the Reserve Bank of Malawi (RBM) as a regulator and whose responsibility to handle consumer complaint at RBM.”
Bvomerani further explained that Malawi insurance market is underdeveloped, but it can be reshaped by ongoing regional or global developments.
“Unfortunately, it is developing at a slower pace because captains of the industry’s response to global developments are not as overwhelming as in the banking sector. A typical example is failure of the insurance sector to fully embrace and optimise the use of information communication and technology to streamline the supply chain of insurance,” he said.
Recently published figures from RBM show that the number of people on insurance is at 240 000 against a population of 17 million with a penetration rate at a paltry 1.4 percent, a situation the Governor Dalitso Kabambe has decried.
“As I look at the insurance industry today, its penetration rate at 1.4 percent after 53 years of independence shows that our industry is yet to grow.
“It [the insurance industry] is more like a child who is not growing, but is growing grey hair,” he said in his address at the 2017 Insurance Institute of Malawi (IIM) Annual Lakeshore Conference in Mangochi last August.
The penetration rate given by Kabambe does not compare well with other countries in Africa and beyond for example South Africa has 16.9 percent, Namibia 6.7 percent and United Kingdom 10.5 percent.