Nico General settles K1bn Eastern Produce claim

Nico General Insurance, a subsidiary of listed financial services group Nico Holdings Limited has finally settled a claim of over K1 billion for Makwasa Tea Factory, owned by Eastern Produce (EP) gutted by fire in 2011.

An electrical pipe which burst on the morning of August 31 2011 caused the inferno to completely destroy the four-storey factory building, plant, machinery and stock.

The razed factory was one of the oldest built in 1937, according to EP managing director Richard Tilley.

Nico General Insurance chief executive officer (CEO) Eric Chapola said on Monday in Blantyre, that albeit the two-year process has been ‘sweet and sour’, the settling of the claim signifies the strong balance sheet the insurance firm has.

“It pays to safeguard assets by being insured at the right value. Nico General is a solid company and we paid without hassles,” he said, at a function attended by CEOs of other insurance firms.

Chapola said the final payment is K914 million, but that they have been making interim payments over the past two years because the factory had to be rebuilt.

He said because of the huge claim, and lack of adequate expertise in the country, they had to import assessors from Kenya.

“Secondly, for a big claim like this one, we want to find out the exact cause of the fire, so we had to import a forensic expert from South Africa to come and look at the damage and tell us. We also had to use local quantity surveyors to quantify the values that we had to pay,” explained Chapola.

He said it is also critical for an insurance company to always arrange for re-insurers to spread the risk, and in this case, they shared it with Real Insurance Company of Malawi Limited, General Alliance and United General Insurance (UGI).

Tilley expressed happiness at the conclusion of the payment of the claim, thanking Nico General for handling the process professionally.

He said after the factory was gutted by fire, they acquired new machinery from Kenya and went into full production in December 2011.

“The factory we have built is the first new factory in 40 years. We have learnt a lot from the experience, we have all come out a lot wiser,” he said, adding that the new factory started production on July 1 this year.

Tilley said the results of the new factory are encouraging.