What is your assessment of your company performance over the past five years?
Basically, we have grown by around 96% in terms of net premiums, from about ZMW70 million in 2010 to ZMW137 million in 2014. In terms of our position in the market, we still remain the largest insurance firm with a market share of 23%.
How would you describe the competitive landscape in Zambia?
In the first place, I would like to stress that competition is welcome. The only challenge we have on that front is the fact that the minimum capital requirement of entering the sector remains quite low, at ZMW1 million, which is roughly $150,000, or less at the current exchange rate. In terms of competition, we have relied on quality service delivery and product innovation to ensure our long-term survival. We have also put in place a clearly defined financial strategy. That has been our focus, and has allowed us to distinguish ourselves from our competition; the point being that prompt claims settlement is our main priority. Let me add that we are the only insurance company in the market to have introduced the “on the spot claims settlement” campaign for five claims categories, provided documentation is available. These are usually claims for things like car windscreens, car batteries, car radios, tires, the home, household goods, laptops, or other electronic devices. We believe that such possessions do not merit a lengthy process, and that in all these cases people require an urgent solution.
What innovations are you responsible for?
We have developed, for the first time, a product in the micro insurance segment for launch in 2H15. In terms of our growth prospects, we need to cater, too, for the low-income segment of our country. In the micro insurance arena, the products that we are launching will cost less than $1 per month, and clients will have a number of options to choose from. In terms of product reach, we have partnered with certain companies involved in selling mass products that are available nationwide. In particular, we have a payment platform called Kazang, which is available both in urban and rural areas in all 10 provinces of Zambia. This is an excellent vehicle for penetrating the vast number of citizens currently excluded from the financial markets. We will also work with mobile service providers to deliver this product as the mobile phone has become a vital platform for nationwide insurance penetration.
How do you plan to inculcate an insurance awareness culture in Zambia?
We have had the product translated into the seven official languages, and information on this will also be aired on local community radio stations through out the country. We will also stage road shows in select areas as we seek to reach members of the public normally excluded by conventional insurance offerings.
What is your assessment of the new insurance act?
In terms of the new act, I would mention three progressive components that contrast with the current landscape. The first is the fact that, for the first time, micro insurance will be subject to specific regulation. Even as we are developing new products in the micro insurance segment, we are doing so with the assistance and guidance of the Pensions and Insurance Authority. Secondly, the new act will help in terms strengthening corporate governance in insurance companies. As an example, the new act has stipulated a minimum of seven board members per entity. The third aspect relates to shareholding structure. Thus far, we have had no guidelines in terms of, for example, the stake that a foreign entity can own when establishing an insurance company in Zambia. Once the new act is in place, foreign entities will only be able to hold a maximum 70% stake, while the remaining 30% is to be held by Zambian nationals. I consider this to be progressive in the sense that Zambians will continue to participate actively in the development of the insurance sector as we have the capacity to do so.
What can the government do to further develop the insurance sector in Zambia?
In my view, one of the major steps the government could take is assisting us in terms of reducing the cost of insurance. At the moment, I feel that the cost remains prohibitively high due to the 16% VAT added to each policy. I believe that if VAT were removed, as was the case before, it would go a long way in terms of incentivizing people to buy insurance. Other than that, I feel the government could also help in terms of more strictly regulating the issue of premium finance. At the moment, we do not have a good mechanism to ensure that those who buy insurance actually end up paying for it; currently, considerable sums are being written off as bad debt. I have seen this happen in other countries where the government addresses the matter through the introduction of the cash and carry policy with regard to insurance premiums.
What role does insurance play in the socioeconomic development of the country?
The benefits of insurance are immense. When you start a business, the shareholders invest considerably to get the ball rolling. The last thing we want to see is a flood, fire, or other calamity laying this effort to waste. In that sense, the insurance industry plays a key role in ensuring business continuity and peace of mind. Secondly, insurance helps the broader economy by inculcating a culture of savings. As insurance companies, we invest much of the revenues generated from premiums into a number of financial instruments, such as fixed deposits, treasury bills, and so on. This money goes a long way in terms of helping with the development process, both directly and indirectly.
What are your expectations for the year ahead?
In 2014, our profitability grew by around 31%. My expectation for 2015 is for profit after tax to grow by no less than 30%. Other than that, I have also devised measures aimed at increasing our liquid reserves by no less than 40% so that we are able to continue responding more positively to the needs of our customers. Right now, we have the largest investment portfolio in terms of liquid investments in the general insurance sector in Zambia. As of December 2014, we had about ZMW27 million in liquid assets by way of held-to-maturity investments.