MOZAMBIQUE - Finance
CEO, NICO Moçambique Vida Companhia de Seguros SA
Simbarashe Manunure has an Associate’s degree in Reinsurance from the American Institute for Chartered Property and Casualty Underwriters. With 15 years of experience in reinsurance and insurance, he started up operations at NICO Vida in January 2012. He also has seven years of experience as Treaty and Facultative Reinsurance Underwriter at ZimRe in Harare and Southern Re in Johannesburg. In addition, he spent eight years as Underwriting Manager and Technical and Commercial Director at Hollard Mozambique.
We are looking at ourselves more as a set-up project at the moment and concentrating on training our workforce and ensuring that all of the systems and procedures are fully functional. Upon entering the market, we have sought to do everything right. When we start trading, we will do everything to deliver a great service to our clients. Due to the lack of universities and colleges that offer insurance as a degree or diploma, the local insurance market has a shortage of skilled resources, especially when it comes to life insurance, and this means that companies need to proactively invest in training and NICO Vida will not be an exception. As far as visibility is concerned, we have not heavily advertised because we want to make sure that everything is running 100% before we start attracting attention. Having said that, we have already started receiving numerous queries from prospective clients, mainly through the brokers we work with.
It is definitely significant. Through 11 group companies, NICO Holdings now has a presence in six countries: Malawi, Mozambique, Tanzania, Uganda, Zambia ,and Zimbabwe. Considering the current macroeconomic conditions and mid-term forecasts of these countries, it is clear that Mozambique is showing the greatest potential. We are quite confident that NICO Mozambique has the potential to become one of the leading companies in the holding.
There are two major hurdles that we intend to surpass: getting access to distribution channels and consumer education. With regards to access to distribution channels, although brokers still pay a very significant role and account for by far the largest portion of insurance transactions, when it comes to certain segments of society we need to look at alternative distribution channels. If we look at other countries such as Kenya or South Africa, we see how distribution can be done via mobile phones or through shop fronts. Banks are also playing an increasing role. With regard to consumer awareness, the biggest challenge is not only getting our clients to know our products but also to understand the culture of insurance. The corporate segment is enlightened as far as insurance is concerned, with some companies picking up the practice from their group companies in Africa, Europe, and Brazil, but the greater challenge is in educating the individual and out retail clients.
Pension funds are obligatory for all companies operating in Mozambique, and this is overseen by the state institution INSS. What we have now is a complementary pension fund that supplements the government system. With the legislation that was passed in August 2011, which opened up the sector to privately run pension funds, we now have many companies that are interested in creating complimentary pension funds for the employees. While this trend currently applies to most of the large and mainly foreign-based corporate entities, we are confident that with time it will expand to other smaller companies. Individual pension funds are now also available, which means that even people who are self-employed can be part of a pension fund.
The major investment instruments are mainly in the money market in the form of fixed deposits, treasury bills, bonds, and real estate. The equity market is not very active as there are only a few companies listed on the stock exchange. The law also permits pension funds to invest up to 10% of fund assets outside Mozambique.
The insurance brokerage scene is indeed strengthening in Mozambique. Whereas five years ago we had fewer than 20 brokers in the market, currently there are more than 35. However, the top seven brokers take up more than 85% of the market share. When determining the influence of brokers, one must note that the influence depends on the insurance company. On one end some insurance companies source more than 60% of their business from brokers, while on the other end we have companies that prefer to concentrate on direct and bancassurance business.
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