TIME FOR A RETHINK
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.
BIOGRAPHY
Christabel M. Banda was appointed the Executive Director of the IAZ after having set up the Association Secretariat in July 2013. She has been coordinating the industry’s various interventions in improving insurance penetration levels in the country through several stakeholder engagements. She holds an MBA and is a Fellow of the Association of Chartered Certified Accountants and a Fellow of the Zambia Institute of Chartered Accountants. She also holds a diploma in insurance from the Chartered Insurance Institute of the UK. Banda is a qualified investment advisor, with an advanced certificate in investments and stockbroking and a certificate in corporate finance and funding.How did the landscape of Zambia's insurance market change in 2016?
In 2016, there was a significant drop in new entrants to the market, which was influenced by the introduction of the new capital requirement regulation. Only one new insurance company registered in 2016, and at the end of 2016 there were 34 insurance companies, five reinsurance companies, and two reinsurance intermediaries operating in the country. This measure to increase the capital requirement was introduced to strengthen insurance companies and ensure liquidity in the insurance market. Considering that insurance penetration in the country is fairly low, the amount of companies servicing the market was far too high, and we now hope to see a smaller but stronger pool of providers that are able to innovate and provide new services to bring the uninsured population into the fold. The legislation has a grace period of two years, which will expire in September 2017, which has given companies time to adjust. The IAZ's mandate is to preserve and foster a favorable climate for the insurance business in the country, which is why we have been pushing for the new Insurance Act since 2012. Currently, insurance business in Zambia is governed by the 1997 Insurance Act, which has now become outdated for the most part. We have, however, received assurances from the Ministry of Finance and the Pensions and Insurance Authority that there will be progress made in enacting a new Insurance Act in 2017.
What are the association's goals and strategies for increasing insurance penetration in the country?
Over 95% of Zambians do not participate in the insurance market. The IAZ's target is to have at least 6 million Zambians covered by an insurance policy by 2019. For this, we need to rethink our insurance offering: Currently most Zambian citizens are employed in the informal sector, but most products available from insurers are conventional and only speak to people in formal employment. Microinsurance bridges that gap, catering for those with irregular income. We also look at certain positive insurance policies that can be made mandatory, such as compulsory group life insurance schemes for employers with a certain number of staff. Some of our members partner with mobile service providers, which will also help to open the market to the 11 million mobile phone subscribers nationwide. Finally, in more developed markets, insurers are visible and there is a high level of consumer education, but this is not the case in Zambia, we are trying to change that. A Finscope survey from 2015 found that 42% of Zambians had never heard about insurance. Therefore, the IAZ is mobilizing resources to push the agenda of raising awareness.
What are the main challenges facing Zambia's insurance market?
Aside from necessary changes to legislation, the other challenge is the issue of liquidity. Insurance in Zambia is not provided on a cash-and-carry basis, and by the end of 2015 we had a situation where 52% of premiums were with debtors. This means insurance companies are struggling to pay claims because their money is tied up in debtors, leading to a double setback of high debtors ratio and also stiff competition resulting in undercutting of rates. Prices are being driven down, and we are operating in a soft market with low rates and high-risk profiles. This puts a great deal of strain on companies, with many companies in 2015 not making profits from underwriting. Many managed to scrape through owing to investment income that cushioned their operations. The IAZ is working with the regulator to settle the issue of liquidity and debt management, keep it in line with the industry's growth, and prevent it from potentially stifling the sector. However, we are optimistic that with the new government policy direction of a homegrown economic recovery program and copper prices looking up, these are realistic goals that can be met.
TIME FOR A RETHINK
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.
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