The Reserve Bank of Malawi (RBM) has unveiled plans to catalyse growth in the insurance sector to build on the success and growth recorded in the past year.
RBM director of pension and insurance supervision Paul Nyirenda said in an interview on Tuesday in Lilongwe that to stimulate growth in the sector, the central bank, which is also the registrar of financial institutions, has been working with the Ministry of Finance and Economic Affairs to review the Insurance Act and migrate to a risk-based supervision approach to align the local insurance sector with globally-recognised industry-based practices.
He said: “The transitioning emphasises the relationship between risk and capital.
“The higher the risk profile of an insurer, the higher the capital the insurer must hold. Thus, the insurer is compelled to either raise capital or improve its risk management practices to avoid additional capital requirement.”
Consumer Association of Malawi executive director John Kapito said in an interview on Tuesday that the changes the central bank is undertaking would be beneficial to insurance firms, but stressed that they would have to improve on their professionalism and customer service to boost insurance uptake. currently at less than three percent.
“It must be understood that the current low uptake of insurance services in Malawi is or has been challenged by the attitude and unprofessionalism of the insurance industry,” he said.
Kapito urged RBM to focus on identifying why consumers are not covered by insurance and are not registered in any pension scheme.
RBM data shows that as of September 2023, the general insurance sector’s total assets stood at K103.6 billion while gross premium written increased by 18.2 percent to K66 billion compared to September 2022.