RBM urges insurance companies to innovate

The Reserve Bank of Malawi (RBM) has called on insurance companies to be more creative to increase insurance penetration which has been stagnated at less than two percent.

RBM regulation executive director Patrick Mhango said this in Lilongwe on Wednesday during the launch of this year’s Insurance Awareness Week.

He said central bank records indicate that insurance penetration is at 1.7 percent, a development he said stifles economic growth for businesses and individuals.

Said Mhango: “As a regulator, we are not happy. We would have loved that the penetration should go up.

“This is a result of several factors top among them being lack of innovation where many insurance companies are just offering traditional insurance products yet the market is so diverse.”

But Insurance Association of Malawi president Abdul Dyton said while this is true, there is a wind of positive change blowing across the sector.

He said the insurance is ready to introduce policies that would accommodate insurance cover for natural disasters.

Currently, insurance companies do not cover damage emanating from natural disasters such as floods, earthquakes or lightning, which they term ‘acts of God’.

Said Dyton: “There is a need to have a special kind of insurance. This is an area that we can explore, but it requires government support as we know that most of the rural people cannot afford to insure their property. Government can actually subsidise this.”

He said the next stage will be to lobby government for its buy-in.

Dyton said the same was done with weather insurance where farmers can now insure their crops against adverse weather conditions, with money having been paid to farmers in form of claims.

During the week, insurance companies are expected to step up sensitisation on insurance to help people fully understand insurance and its benefits.