COVER UP

Mozambique 2016 | FINANCE | FOCUS: MOTOR INSURANCE

Insurers are increasing their scope to cater to the growing automobile insurance market, especially with manufacuturers rolling out more vehicles.

In Mozambique, the law stipulates that there should be only two types of mandatory insurance coverage. First of all, every worker in the country must be covered against accidents meaning that business entities are obliged to carry worker compensation insurance to cover work-related accidents. The second is third-party motor liability for local and foreign-registered cars. As such, the fact that the automotive industry has recently experienced a boom in the country should be good news for the insurance industry.

In fact, the first Mozambican car manufacturer was rolled out in September 2014 at the Matchedje Motors plant, whose plans are to produce 100,000 units in 2016 and 500,000 by 2020. Hyundai also introduced an auto assembly plant to Mozambique in 2014 with a target of assembling 2,500 cars over the course of 2016. Other players such as Renault Mozambique are expecting 30% growth in 2016, as Paulo Oliveira, Administrator of Renault Mozambique, told TBY in an exclusive interview. Even in the truck and bus manufacturing segment there are new players getting involved in the country. Luís Lopes, the Executive Director of Auto Sueco Moçambique, entered the country in September 2014 and sales of Volvo trucks have been progressing positively.

Dalila Tsihlakis, Director of Ronil, told TBY that while the new car market is growing from around 6,000 to 7,000 units per year, the second-hand market is also significant, but still largely unregulated. In fact, she stated that “around 65,000 used vehicles enter the country each year,” and that unregulated imports of vehicles can destroy roads, cause accidents, create pollution, and introduce high levels of non-biodegradable tires. In order to improve this situation the government plans to place higher taxes on vehicles older than eight years but it is clear as well, that there is need for a stronger and a safer public transport system.

In a situation like this it seems like insurance companies will have some extra work for the next few years as even newer models are coming out. Market leaders will be the ones keen to implement technological innovations and capture this growing market before it drives off into another direction.