Innovation drives the Malawian insurance industry

While the Malawian insurance industry is highly regulated – insurers have successfully customised new insurance products to the non-life segment. 

Innovation is one of the key drivers for growth in Malawi’s small and growing insurance industry. According to new research from Timetric, the key segment driving the industry is the non-life insurance segment, which accounted for a 67.0% share of the total insurance value in 2012. The Malawian insurance industry is highly regulated by the registrar of Reserve Bank of Malawi (RBM), which is responsible for exerting control over the insurance and allied activities, including insurance companies, reinsurance companies, insurance brokers, loss adjusters and intermediaries.

In July 2012, NICO General Insurance introduced Cellsure – a product specifically developed to target users of expensive mobile phones. Cellsure is just one example of how Malawian insurers have been using the growing economy and new consumer trends to develop more customised insurance products.

Over the forecast period (2013 – 2017) the insurance industry is expected to be driven by the growing economy. However, the falling profitability and low penetration rate will be the major challenges faced by Malawian insurers.

Group life category increased due to a pension act in 2011

The performance of the group life insurance category in the life insurance segment was exceptional in 2011, with a rise in the number of group life insurance policies from 67 in 2010 to 371 in 2011. This increase in number is due to the Pension Act in 2011. This act mandates every employer in Malawi to provide life insurance cover to its employees. The Pension Bill was enacted by Parliament in early 2011 and came into force on June 1, 2011. The group life category is expected to drive the life insurance segment over the forecast period.

Rising tobacco exports to drive the non-life segment

The agricultural sector continues to be the main driver of the Malawian economy. The main export item of Malawi is tobacco, accounting for 55% of the total number of exports. Tobacco production in Malawi grew by 7.7% in 2011 and stood at 237.2 million kilograms, compared to 220.2 million kilograms in 2010. The growing tobacco production will further increase the exports figure in Malawi over the forecast period, resulting in positive growth in the insurance industry, supported by the promotion of marine and transit insurance.

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