THE FUTURE IS MICRO

Zambia 2014 | FINANCE | INTERVIEW

TBY talks to Martin Libinga, Registrar & CEO of the Pensions and Insurance Authority (PIA), on the nature of the insurance market in Zambia and the potential of micro insurance.

Martin Libinga
BIOGRAPHY
Martin Libinga was appointed Registrar & CEO of the Pensions and Insurance Authority in 2010. Prior to that, he was Deputy Registrar in the Pensions Department. He is a leader with extensive experience in pensions, finance and accounts. He holds an MBA in Finance.

The Pensions and Insurance Authority (PIA) started its activities in 2005. What have been your main achievements since then?

The PIA is a regulatory and advisory authority in the pensions and insurance sectors. We have seen growth in terms of premiums written by insurance companies as well as a rise in net assets and premium returns. We have seen the number of players in the market increase as well, both local and foreign. We have also noted some stability in the industry that we think was the result of the various measures that we have put into place. We think that is generally good for the financial sector.

What measures or steps have you taken in terms of spurring growth in premiums and net assets?

In 2005, we passed the Pension Scheme Regulation Act, and then there was also the Insurance Act. In those acts, you can see that there were certain functions like the requirement to separate life and non-life insurance. It has thus become easier to manage because the fundamentals for a life insurance company are different from those of a non-life company. We have seen similar separations for the pension sector, where you have asset managers and pension administrators. There was a proposal for custodial services as well. In terms of pensions, we have seen new entities coming in, and foreign companies entered the market with new and innovative products that helped to increase the insurance penetration rate. This is better for the customer in the end because there is more competition and the providers have also worked to improve their systems.

The growth in the insurance and pension sectors has been at about 3.6% annually since 2006. What have been some of the main drivers for this growth?

One of the main drivers for this growth has been the micro-insurance sector. In the past, there were few people who were really benefitting from the insurance sector, but now we are trying to broaden that by having a number of insurance participants in the financial sector. We have seen a number of participants offering micro-insurance products to various people such as farmers, and we think that is positive because we want people to get into the habit of using the financial sector.

What strategies do you use to allow these microfinance companies to work and acquire clients?

We are working with the other two financial regulators; those are the Bank of Zambia and the Securities and Exchange Commission. Through the government, we have what we call the Financial Sector Development Plan (FSDP), where we are trying to develop the sector together. Each regulator will focus on its own area of expertise, but now we have a central unit that will deal with educating people on how to use the services that are available. It has been quite helpful because we go out as a team and pay visits, and also when there are trade fairs and shows. Financial inclusion is the idea; we would even like to bring it into the school curriculum.

How has technology spurred penetration of the insurance sector over the recent years?

Mobile phone companies are playing a major role with mobile money and related products. Imagine all of the subscribers being insured; that would have a really serious impact. These innovations came late in 2013 and early in 2014, and we think that it will start to take off. We would like to see 4%-5%growth, and we expect it to grow to over 5% in the future.

You pointed to micro insurance as one of the key sectors that has driven the growth in the insurance industry; what others do you see?

Construction has contributed in a way, but it could have been much higher. With the participation of foreign companies, it was lower than it could have been. Micro-insurance, construction, and agriculture are the main industries that have propelled the insurance sector, especially micro-insurance because it focuses on agriculture.