A low level of market penetration combined with a series of special national circumstances means that the insurance sector is poised to expand rapidly in the coming years; provided the consumer can be educated about the value of insurance products.

Zambia ranks among the top 15 fastest-growing economies globally, and its economy continues to be strong, with the country having achieved lower-middle-income status in 2011 from the World Bank. According to Insurance Industry Today, the country's insurance industry registered strong growth during the 2011-2014 period, driven primarily by the non-life segment, which accounted for 63.7% of the industry's gross written premium value in 2013. A number of insurance companies entered the industry, attracted by the positive growth potential and low penetration rate, which stood at 1.37% of GDP in 2012, compared with the African average of 3.65%.

According to the Pensions and Insurance Authority (PIA), there are over 1 million life insurance subscribers in 2013, which is a massive growth from merely 100,000 life insurance subscribers in 2009, and the pensions and insurance sector has grown by 3.6% on average a year since 2006. Meanwhile, the Insurers Association of Zambia (IAZ) says over 2,500 direct jobs have been created in the insurance industry to date, while another 1,000 plus are employed under the agency contracts in 27 different registered insurance companies.

There are also a number of proposed 2015 budgetary and government policies that are relevant to the insurance industry. The Finance Ministry has provided KMW1.3 billion for social protection, of which KMW805 million is earmarked for the Public Service Pension Fund, KMW180.6 million for the social cash transfer scheme, and KMW50 million for the food security pack. The allocation to social protection translates to 2.7% of the overall expenditure in 2015. To address these challenges, an inter-ministerial committee was constituted to review the pension system. The committee has since completed its review and made recommendations to redesign the pension rules and framework and harmonize the social security legislation. The government is now considering these recommendations.

The PIA says it that by the end of 2014, it will re-submit proposals to the government on increasing the minimum capital requirement for insurance firms. Initially, the authority had recommended the government raise the figure to KMW10 million from the current KMW1 million. It also notes that the government should consider introducing compulsory group life assurance schemes for companies and institutions employing over 25 employees to ensure that the welfare of those employees is protected, even as they offer tax incentives to companies that offer micro insurance products targeting the most vulnerable in society. Furthermore, the IAZ has urged the government to zero rate the premiums on non-life insurance services and create incentives for the insuring the wider public in the 2015 national budget. In its submission to the national budget presented to the Ministry of Finance, IAZ President Shipango Muteto said zero-rating the premiums on non-life insurance services would make them more affordable for the majority Zambians.

Efforts at expanding market penetration also continue. Despite industry growth averaging 20% yearly since 2009, there still remains huge potential for the industry if the challenge low awareness levels is overcome. The nationwide insurance awareness program entitled “My Life, My Well-being, My Insurance," which includes radio programs, a drama on television, an inter-schools debate, and public exhibitions in most major cities. Penetration is currently as low as 3%-4%. Official statistics show that out of every 24 people, only one person has a form of insurance in Zambia. Although the penetration levels are still low, 2013 insurance premiums grew to KMW1.5 billion, but still forming less than 2% of GDP.


The challenges of the Zambian market require innovative products, and many of these products are based on the concept of microfinance. The industry defines micro insurance as the protection of low-income people against specific risks in exchange for regular premiums proportionate to the likelihood and cost of the risk involved. Enhancing uptake of insurance cover by lower-income people can only be achieved if mechanisms that meet the specific needs of these consumers are put in place. A number of innovative programs are being rolled out. For example, the “Airtel Insurance" scheme will immediately insure millions of Zambians, and claims to increase insurance market penetration by more than 300%. The product is a life insurance scheme provided free on an automatic basis to all Airtel customers topping up their mobile phones by ZMW10 or more per month. By providing its customers with free insurance, Airtel is increasing awareness of the industry and growing the market. Airtel Networks Zambia, is working in partnership with African Life Assurance and MicroEnsure to help bring insurance products to the grassroots. MicroEnsure was founded in 2005 in the UK as a subsidiary of US-based nonprofit microfinance network Opportunity International, and provides a range of micro insurance products to 3.5 million clients in Africa, Asia, and the Caribbean. Another innovative scheme is the R4 Rural Resilience Initiative (R4). A project of the Swiss Agency for Development and Cooperation (SDC), which has pledged $6.6 million, R4 aims to help Zambia and Malawi cope with the effects of climate change. R4 extends insurance protection against drought to vulnerable smallholder farmers and assures some level of food security. The funds will be implemented under the UN's World Food Programme (WFP) and Oxfam America's R4 Rural Resilience Initiative program in the two countries. With the cooperating partners' financial support, Zambia has taken a broad risk management approach to help vulnerable rural households to increase their food and income security in the face of cumulative climate risks. The project will help bring the resilience package to at least 4,000 farmers in Zambia and Malawi by 2015 and help scale up the program in the subsequent years. The WFP and Oxfam America intend to reach a total of 100,000 insured farmers by 2017.


The pension industry in Zambia is known as a two-pillar system—consisting of the compulsory pillar and the voluntary pillar. All employed individuals in the formal sector are compelled to contribute to one of the three public schemes, namely the Public Service Pension Fund (PSPF), the National Pension Scheme (NPS) managed by the NAPSA, and the Local Authority Superannuation Fund (LASF). According to the PIA, the combined asset size of this pillar was estimated to be ZMW6 billion as at the end of 2012. The combined membership in 2012 was estimated at 770,218. The voluntary pension pillar is comprised of Trusts that are established by employers and are supervised by the PIA. There were 228 registered and active pension schemes in Zambia with a total membership of 82,782 as at the end of 2012. The combined asset-size as at the end of 2012 was KMW3.2 billion. This amount grew significantly from KMW1.8 billion in the year 2007. But it is still limited. According to Martin Libinga, Registrar & CEO of the PIA, there are currently 235 registered pension schemes. He tells TBY that; “Very few people really appreciate pensions. Most people want their money now, and when they retire they often have nothing. In terms of social security, they also have nothing. If they had invested in pensions, they would have had something to fall back on, so it comes down to education."


Since the compulsory motor insurance law came into effect in 2013, automotive has become the largest insurance segment in Zambia. The government was faced with the challenge of taking care of accident victims, compensation of emergency response service providers, and related medical costs, and instituted the scheme to meet these challenges and encourage concerted efforts among all players in the road transport sector. Zambia had a history of high road traffic accident incidences that killed more than 1,200 people per year and injured thousands more, yet regrettably many motorists had been inclined to view the current scheme as a form of tax that they were at liberty to evade rather than as a protection against their personal liability. As with many other issues facing the sector, the real question comes down to consumer education, and both the government and the industry are working to tackle this question head on.