How would you describe the competitive landscape in Zambia?
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, batteries, radios, and tires, houses, 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 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 have a maximum of 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 capacity to do so.
What could the government do to further develop the insurance sector in Zambia?
In my view, one of the major steps the government could take is assist 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. 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.