Players in the insurance industry have given mixed views on the introduction of insurance supervisory levy by the Reserve Bank of Malawi (RBM) effective September 1 2017.
While others say the introduction of the levies is timely as it will help protect consumers in times of liquidation, others argue the timing is not right and not supportive of the developing industry in a troubled economic environment.
The Malawi Government Gazette supplement dated September 1 2017 indicates that the Financial Services (Insurance Supervisory Levy) Regulations 2017, shall apply to all insurers, reinsures and insurance brokers licensed to conduct insurance, reinsurance and insurance broking business.
The supervisory levies will cover supervision costs and strengthen and enhance a sound regulatory and supervisory framework, according to Minister of Finance, Economic Planning and Development Goodall Gondwe who signed the gazette.
This regulation means insurance firms will have to pay one percent of their audited annual profit for the preceding year, or K2.5 million for players in general insurance and life insurance businesses, K3 million for reinsurers whichever is greater provided the amount shall not exceed K8 million and K10 million, respectively.
On the other hand, insurance brokers shall pay a minimum supervisory levy of K500 000 or an amount equivalent to one percent of audited annual profit for the year or whichever is greater provided that amount shall not exceed K2.5 million.
RBM spokesperson Mbane Ngwira yesterday justified the new regulation, saying it is just being extended to the insurance sector as the commercial banks already have them.
“It is a shared responsibility for the credibility of the industry. Currently, we supervise without them contributing,” he said.
In an interview yesterday, Prime Insurance Company Limited business development manager Beston Mhango welcomed the regulation as timely, observing that it will protect consumers in times of liquidation.
“If there are no regulations and someone has a claim it can take ages to be settled,” he said.
But Smile Life Insurance Company chief executive officer Stain Singo said timing of the levies is not right.
“Of course the economic situation is tough for a country to be introducing levies,” he said.
United General Insurance chief operations officer Macdonald Chibwe said the regulation is not supportive of developing industry and an economy that is struggling in so many areas.
But chartered insurance practitioner Duncan Bvomerani said the move will enable RBM to collect money for its consumer protection board, which is yet to be formed, to help consumers in times of liquidations.