CHANGING TIDE

Mozambique 2016 | FINANCE | INTERVIEW

TBY talks to Mufaro Chauruka, Managing Director of Moçambique Resseguros (MOZRE), on building the necessary resources, increasing competition, and expectations for the year ahead.

Mufaro Chauruka
BIOGRAPHY
Mufaro Chauruka was born in Zimbabwe and moved to Mozambique in 2006. He holds a Master’s Degree in Business Administration and a Bachelor’s Degree in Business Studies, both from the University of Zimbabwe. He has more than 23 years of experience in the reinsurance industry. He has attended various technical and specialist reinsurance and insurance courses in the UK, Switzerland, and Nigeria, among others. He recently served as an executive committee member of the African Insurance Organisation (AIO) and is actively involved in training insurance professionals through presentation of various topics on insurance and reinsurance at seminars as part of capacity building and market skills development.

What were the main factors behind MOZRE's rapid growth in its early years?

Being the first reassurance company was a major factor. People used to depend on reinsurance companies based outside of Mozambique, such as in South Africa, Mauritius, Kenya, Zimbabwe, and Europe. We are not just here for the business, but also to develop the market in terms of skills development. We found that there was a gap in the market for insurance knowledge and training. We started to run short seminars in insurance for one or two days and invite insurance companies who are our clientele. We share ideas, teach, and share experiences. In addition to that, this year we introduced the Portuguese version of Certificate of Proficiency (COP) , which is the basic insurance certificate. Before that, in 2010, the Insurance Institute of Zimbabwe, which is an affiliate of the Chartered Insurance Institute of London, started providing COP and then diplomas in insurance examinations here in Mozambique, both in English. These are facilitated by MOZRE. Since 2010, over 100 people have successfully completed COP examinations. Before that, only about 20 people had the qualification.

Do insurance and reinsurance companies have the resources to ensure large-scale projects, such the LNG project?

We are working toward building capacity and a number of seminars have been conducted involving other reinsurance companies. For example, Africa's biggest reinsurance company, based in Lagos, conducted training in Maputo on underwriting oil and gas risks. These are major projects, and even when we do not have enough capacity in terms of capital, we spread the risks. We need to get involved, by starting small somewhere and then growing year-by-year as we build our capacity. In some cases, insurance and reinsurance companies can come up with a pool, where companies come together to build capacity in terms of capital base. They put their capital into a pool to insure petroleum interests, for example, and that pool can buy reinsurance to protect itself. It is also another way of making sure that a significant portion of the business is shared in the market.

How competitive is the market in Mozambique, and what are the implications?

Among our clients, the actual insurance companies, competition is tough. The reason is that there have been a number of new entrants. When we started operating in 2007 there were only five insurance companies, now there are 17. This is because there has been a lot of attention focused on Mozambican economic growth and potential investors see it as an opportunity; they want to come here and get a share of the market. The price wars among insurers are bringing down prices, and when the price is reduced, so is the profit margin. The exposure to risk is still there; however, profits are diminishing.

What are your expectations for the year ahead?

This year has been tough for the insurance industry in Mozambique, as GDP growth has slowed. Expectations for GDP growth have fallen to 6.3% from 7.5%; therefore, we do not expect too much growth for insurance companies. When we talk to local insurance companies they say that their growth is quite slow, at 5% or less. In our case, as a reinsurer, we are protected to some extent because 45% of our business comes from outside of Mozambique. We have actually experienced growth of 22% as of September, and by the end of this year I expect our growth to be somewhere between 15-20%. The other issue is the effect of the US dollar, not only in Mozambique, but for all regional currencies. Much of our business from outside will be in dollars; therefore, when it comes here it will boost our premium in local currency. Now that the new government is in place, the major projects need to get done, and if the government is spending money, this will also be good for the insurance industry.