Following independence in 1975, nationalization put an end to the number of private insurance firms operating in Mozambique. In the early 1990s, legislation making it easier for foreign companies to enter the country was introduced. This paved the way for the growth of a new generation of private insurers and an end to the monopoly of the state-owned insurance firm, as well as the lifting of a ban on insurance brokerage firms.
Until the late 1990s, the insurance sector was supervised by the Ministry of Finance, but following a new article of legislation in 1999, the Inspecção Geral de Seguros (IGS) was created as the main supervisory body of the sector. The IGS's mandate was later expanded and the institution was renamed Instituto de Supervisão de Seguros de Moçambique (ISSM). The termination of the state monopoly and the introduction of better regulations set the insurance industry on an upward trajectory—there are currently 10 insurers operating in the country, as well as many insurance brokerage services firms. As a tribute to the sector's long-term growth aspirations, the Organization of Eastern and Southern Africa Insurers is set to host its 40th annual conference in Maputo in late 2013. Bringing together insurance experts from across the continent, it is considered a crucial networking opportunity and the biggest event on the African insurance calendar.
The insurance sector, however, still only accounts for 1% of GDP, a comparatively low figure due to the lack of demand from individuals. While demand for corporate insurance is likely to increase with the growing number of foreign firms entering the country to partake in transport- and extractive-industry megaprojects, the small personal insurance segment could get the boost in needs from the increased expendable income the resources boom could bring to the population in the long term. “Much of this development will be linked to the politics that will emerge from the recent discoveries of natural resources," concurred Miguel Navarro, Director General of Tranquilidade Moçambique Companhia de Seguros, adding that “if Mozambique can use its vast potential wealth for infrastructure development and assistance for small businesses to grow, then the insurance sector will also flourish." Tranquilidade Moçambique Companhia de Seguros focuses on both non-life and life insurance, through Tranquilidade Moçambique Companhia de Seguros Vida, and sees individual insurance, as well as SMEs as “the next step."
A host of insurance-related services are on offer in Mozambique, including life, property, health, and casualty insurance policies. Much of the personal insurance premiums currently sold are mandatory workers' compensation insurance, which companies are obligated to obtain to cover work-related injuries. Vehicle insurance is also a significant line in the industry, with all vehicles on national roads and highways obligated to have third-party liability coverage. The country's main insurers include Empresa Moçambicana de Seguros (Emose), Global Alliance (GA), Hollard Moçambique Companhia de Seguros, Moçambique Companhia de Seguros (MCS), and Millennium Seguradora Internacional de Moçambique. Millennium has the largest share in the market, with over 30%. Zimre Mocambique was the country's first reinsurance company. The sector is no stranger to FDI, with the most significant deal involving a foreign company taking place in late 2011—South African finance group ABSA purchased 100% of local firm Global Alliance Seguros in August 2011, as part of the group's regional expansion plans. The company also owns a majority stake in Barclays Bank Mozambique.
Additionally, the Mozambican Agriculture Ministry also has a foot in the insurance industry, having launched a pilot program in late 2012 to insure cotton producers and companies that promote the crop in two parts of Nampula Province. Aimed at protecting rural workers and encouraging investment, the program will also mean that producers in the districts of Monapo and Lalaua, and their supporting companies, could be paid up to $700,000 per district. Cotton producers that have had crops damaged by flooding or heavy rain may also receive payouts of up to MZN3,000 per hectare. Hollard Moçambique Companhia de Seguros, also hailing from South Africa, is also involved in the lucrative agriculture insurance industry, offering the country's first ever weather-index insurance product in order to protect smallholder farmers against extreme weather conditions such as drought.
Insurers are likely to increasingly push corporate insurance policies while waiting for interest in personal insurance schemes, away from mandatory accident insurance, to grow in popularity. Agriculture insurance will also offer growth opportunities going forward, as will infrastructure as the country looks to bring its transport network in line with its mineral export ambitions. For personal insurance, however, given that only 5% of adults have any kind of coverage and 50% of adults claim never to have even heard of insurance products, there is still a long way to go.