INSURANCE
The low insurance penetration rate in Zambia is an indication of the untapped growth opportunity for providers of financial services.

Overall, 2016 was extremely successful. We do not have the official industry figures yet but can confirm that we remain the market leader, with our gross written premium increasing from ZMK313 million to 353 million. I attribute this success to the confidence that the market continues to place in PICZ, the number-one insurer in Zambia now for at least the last five years. We are number one in terms of the top line and bottom line, and in both the corporates and retail line. We also have the largest liquidity reserves in the market, and are the only primary insurance company in Zambia to receive a credit rating, which stands at A+. Insurance penetration levels in Zambia are low, and we want to help in the drive to raise awareness. As a company, PICZ works with the IAZ to aid in this transition. In 2015 we sponsored the publication of a book, Insurance Basics: The Zambian Experience, authored by one of our own staff members, and we continue to sponsor an insurance column in the Times of Zambia. Beyond that, in 2017 PICZ has set a goal to engage with the media on this agenda to raise insurance awareness levels.

Considering that many business areas have been impacted negatively by adverse economic conditions, 2016 was an unexpectedly great year for Hollard. We grew by about 30%, our staff numbers increased, and we started planning an expansion into two other geographical areas, either in the east, south, or northwest of the country. This is all something of an achievement, given the difficult market this year, and our success is a result of our well-distributed network of insurance brokers and the support we have received from them throughout. Our business is broken down into corporate, commercial, and individual sub-fields. We have witnessed a shift in the overall success of these markets, with the corporate space being our traditional biggest source of business. An increased number of SMEs as well as a more influential middle-income sector have filtered into that commercial space, and because of this we plan to focus our attentions there in the near future. That said, we also look to penetrate the life insurance market. Our sister company, Hollard Life Insurance, has plans to expand in Zambia. Microinsurance is also worth mentioning, though it needs an improved legislative landscape in order to become a viable option for many Zambian citizens.

Zambia is an attractive insurance market, with a combination of low insurance penetration levels, a young and growing population, and a rapidly expanding middle class. Life insurance penetration here is less than 1%, so there is plenty of scope for the market to develop rapidly. The size of the potential target market for mainstream insurance is roughly 600,000-700,000 people, but this does not include the informal sector, where the majority of Zambians are employed. We plan to reach out to the informal sector through several channels. One of these is microinsurance; Prudential was the first company in Zambia to introduce a microinsurance product in 2011. A key challenge for the industry remains education—we need to continue to work on educating young people on the benefits of insurance. Also, the take-up of technology in the insurance sector here is at a nascent stage. While it is a vital part of the insurance back-office, as a tool for interacting with potential customers, it tends to favor more standardised products over life insurance. We are supportive of technology that makes insurance more comprehensible and will continue to assess the Zambian market, evaluating the ways in which technology can be harnessed to improve customer relations.

Since 2002, we have grown to become market leaders in Zambia, with 35% market share by revenue in 2015. Sanlam remains the unrivalled market leader in Zambia and we have 16 branches in Zambia, with 106 full-time employees and more than 500 direct sales agents. Our provision of insurance solutions to the informal sector is not an endeavor to bring our insurance clients from the informal sector to the formal sector; rather, we seek to provide insurance solutions to them in their existing circumstances and geographical locations. Our distribution philosophy is anchored on the need to not only reach the customer to sell insurance but to also be able to service the customer cost-effectively during the subsistence of the insurance policy. Each channel we deploy must therefore provide solutions to the whole value chain from sales, premium collection, policy servicing, and claims management. In this regard, we view the informal sector as a customer segment that can be reached by way of aggregation. In this model, we bundle our insurance solutions to the primary economic activity of each aggregated group. Our premium collection frequency is aligned to the seasonality and income cycles of the affinity memberships.

We saw early on that we would need a targeted strategy in order to stay afloat. Over time, if a company pushes to underrate to retain market share, it starts absorbing bad risks, too. So we established a disciplined approach; instead of writing for top-line insurance only, we started writing for bottom line, driving for more profitable, quality premium paying business. In addition, unlike our competitors, which remained focused on large towns, we developed a larger distribution strategy, especially for our agricultural insurance and motor insurance products. By spreading ourselves across all districts, we have established business in areas that our competitors are not able to reach. We have also invested considerably in raising personnel capacity, so that no insurance solution is too complicated for our staff, and we are able to advise our clients on the best possible strategy, whatever their specific needs. We also implemented a credit management policy, whereby we oblige our clients to pay premiums that are underrating or else the policy is cancelled. We hope to improve our market share by working with government agencies under the IDC. We also look at branch and district profitability, perhaps with a view to franchise off those branches that are not performing as well as we would hope.

TABLE OF CONTENTS
Year In Review
What A Year
Zambia has long been a bastion of stability in Southern Africa, and while its economy has been rocked in recent years by the falling value of copper prices, a devaluating kwacha, and high inflation, through the Economic Recovery Program the government has bold ambitions to right the ship.
read articleReview
Convoke, Confound & Collect
Squeezed between a rock and a rather hard place by the slowdown in Chinese demand for copper, by far Zambia's biggest export and government-revenue generator, President Lungu has been forced to get creative in his country's alliances to broaden revenue streams and lessen its dependence on the vagaries of one foreign market.
read articleGuest Speaker
Dr. Stergomena L. Tax, Executive Secretary, Southern African Development Community (SADC)
TBY talks to Dr. Stergomena L. Tax, Executive Secretary of the Southern African Development Community (SADC), on regional economic development, boosting pan-continental free trade agreements, and improving security through mutual development.
read articleInterview
Susan Sikaneta, Ambassador, Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa
TBY talks to Susan Sikaneta, Ambassador of Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa, on championing peace across the continent, advancing women's rights, and promoting Pan-Africanism.
read articleInterview
Sebastian C. Kopulande, CEO, Zambian International Trade & Investment Centre (ZITIC)
TBY talks to Sebastian C. Kopulande, CEO of Zambian International Trade & Investment Centre (ZITIC), on taming austerity, stimulating sustainable growth, and creating the framework to support entrepreneurship
read articleFocus: Zambia Plus
Adding it All Up
On October 20, 2016, at the 2017 Budget Address, Finance Minister Felix Mutati launched the government's economic recovery program, christened "Zambia Plus." The program is designed to spur domestic productivity, through strengthening ties and collaborating with external donors and developers.
read articleReview: Banking
Macroeconomics Rule the Roost
In its ongoing efforts to diversify away from one principal commodity, copper, the government fosters the development, standardization, and efficacy of the private sector. In doing so the systematic support of the financial universe, especially banks, is vital, as is the goal of financial inclusion.
read articleFocus: SME Growth
IMF support program
An IMF support program stands to provide Zambia with some much-needed discipline on its expenditure and operational efficiencies; however, many caution the need for Zambia to determine what it wants to achieve and how the program will benefit the country.
read articleInterview
Christabel M. Banda, Executive Director, Insurers Association of Zambia (IAZ)
TBY talks to Christabel M. Banda, Executive Director of Insurers Association of Zambia (IAZ), on the evolution of the local insurance landscape, raising awareness, and tackling challenges in the sector.
read articleFocus: Solar
Sunny Side Up
As power demand continues to rise and power production continues to fall behind, it's the same old story for Zambia, still wrestling with an ongoing energy crisis. Public- and private-sector drives are seeking to mitigate this deficit by activating the country's solar industry.
read articleInterview
Margaret K. Chalwe-Mudenda, Director General, Zambia Information and Communications Technology Authority (ZICTA)
TBY talks to Margaret K. Chalwe-Mudenda, Director General of Zambia Information and Communications Technology Authority (ZICTA), on new projects, the ZNDC, and expectations for the year ahead.
read articleInterview
Hon. Dora Siliya, Minister, Agriculture
TBY talks to Hon. Dora Siliya, Minister of Agriculture, on the investments being made in agriculture to enable agricultural households, diversifying Zambia's basket of produce, and making international markets more accessible for local producers.
read articleInterview
Hon. Charles R. Banda, Minister, Tourism and Arts
TBY talks to Hon. Charles R. Banda, Minister of Tourism and Arts, on the wealth of tourism destinations within Zambia, efforts to bring more visitors to the country, and what the Tourism Development Fund will contribute to developments.
read article