Market fire outbreak: Is fire insurance the way to go

When fierce fire destroyed Karonga Market a week ago, it became a third market fire within the space of four months in the country. Yes, this accident has left market traders wondering if they are safe operating their businesses in the markets as the exact causes of the fires have not been established underway.

Most of them are waiting with bated breath the outcome of the investigations. As anticipated, this has raised speculations on the causes of the fires, ranging from arson, electrical faults and charcoal burners left overnight.

The fire series started with Mzuzu Main Market on the evening of Saturday April 19, affecting 500 traders and damaging goods worth K110 million (about $290 000).

Three months down the line, another fire erupted at the same market with a bang. This time it destroyed commodities worth K298 million (about $785 000) belonging to 911 traders.

When Mzuzu vendors were still mourning their loss of livelihood and capital, their fellows from Lilongwe Flea Market, popularly known as Tsoka, were in for a shocker as two weeks later their goods worth millions were destroyed by fire.

All these three markets are the hubs of economic activities for the two cities and Karonga town.

Therefore, the fire outbreak has implications on the local as well as national economy.

In the first Mzuzu market fire episode, a 42 year-old widow, Rita Simwaka, a Chibavi Township resident ost her only source of livelihood—a K200 000 worth restaurant.

Simwaka was left destitute without support for her four school-going children.

The second fire outbreak saw Irene Harawa, who operated a salon and several other ventures in the market, losing items valued at K1 million.

Harawa has been plying her business in the market for the past nine years and is now rebuilding from scratch.

As for Tsoka Market vendor Ignacio Chiwaya, who is also vice-chairperson of the market traders his phone and computer accessories stall valued at K8 million were destroyed in the fire.

Four weeks down the line, Chiwaya is still mourning his lost glory; without an alternative source of income.

He says it is sad that politicians, President Peter Mutharika and Malawi Congress

Party (MCP) president Lazarus Chakwera, are the only ones who cheered them up with K10 million (about $27 000) and K1 million (about $2 631) respectively which they shared K10 500 (about $27) each.

He further explains: “Currently, Opportunity Bank Malawi (OBM) is the sole financial institution that has compensated its customers with K25 000 (about $65) each.”

OBM marketing manager Victoria Munthali says the commercial microfinance bank compensated traders who are servicing loans with the bank while assessing the damage the fire caused.

According to Munthali, the bank outsources insurance services from Nico General Insurance Company to cover their clients in any event under credit health insurance.

He says these are the fire victims who will benefit from the institution’s Bank Insurance Model (BIM).

She explains that fire is one of the risks that is insured against.

However, most traders are not familiar with the benefits that come with covering businesses against fire.

Said Harawa: “I have never been visited by an insurance company, marketing policies covering one’s property against fire. If it were so, I would have considered it.”

While Chiwaya, who has been vending for 14 years, says “I do not have any knowledge on fire insurance, I’m blank on that.”

“I am only aware of motor vehicle insurances because of traffic police who enforce it, but fire policies, no, no.”

President of the Northern Region Vendors Association, Stanley Simbeye, has a different opinion.

He says government through local councils should consider covering markets for traders not to feel the impact in case of an event such as fire.

Simbeye singles out other African markets that have gone the insurance way.

“I have been to Kariakoo Market in Tanzania, Lusaka in Zambia and Mpezanamo in Zimbabwe. These markets’ traders are insured,” he said, a claim Business Nation did not substantiate.

As lack of knowledge takes centre stage, does the blame rests solely on vendors?

President of the Insurance Association of Malawi, an umbrella body for general insurance companies, Dorothy Chapeyama, says it is the role of the organisation to sensitise market traders and the public on the benefits of insurance.

She says the major factor affecting the insurance industry is not only lack of knowledge but also economic hardships.

“Mostly insurance is the least to be considered when things are all good,” says Chapeyama.

Asked on the efforts they have put in place to create awareness, Chapeyama says her association was part of the financial literacy week that took place late last year in Blantyre in which they talked about fire policy.

She further says premiums are lower than what is paid in an event.

“The problem is that people appreciate insurance policies when something negative happens,” narrates Chapeyama.

Concurring with Chapeyama, Chiwaya says “you indeed realise the importance of certain things after learning it the hard way; now I know the value of fire insurance.”

The Finscope Consumer Survey Malawi 2014 report shows that the insurance sector is small in the country.

The survey indicates that insurance products largely target the needs of those who are on salaries, with disposable incomes and higher levels of education.

According to the report, 97.8 percent of adults or 18 years and above do not have any kind of financial product covering risk.

It says only 2.2 percent (about 171 000 people) have some financial products covering defined risks.

Although the report says the absolute number increased slightly by about 8 000 individuals, the proportion of the adult population that have insurance decreased slightly from 2.7 percent to 2.2 percent due to population growth.

It points the drivers as life, motor vehicle and medical insurance while the barriers to the uptake of cover are lack of awareness and affordability.

As it is, it remains indisputable fact that market fires are devastating and snatching livelihoods and hard earned capital.