Africa-Press – Malawi. Sluggish performance of the local economy in 2021 had a knock-down effect on the insurance sector despite registering moderate growth, industry players say.
The sector grew by 9.69 percent in the year under review compared to a 9.11 percent growth in the preceding year, figures from the Insurance Association of Malawi show.
However, the insurance market remains underdeveloped with the penetration rate remaining minute at about three percent.
In the 2021 financial year, the industry registered claims valued at K26.2 billion, up from K22.6 billion in 2020.
Profits generated before tax rose to K7.9 billion, representing a 61 percent rise from K4.9 billion posted in 2020.
But in a response to an emailed questionnaire, Insurance Association of Malawi Vice President Abdul Mageed Dyton said the industry also registered increased cases of fraud related to insurance claims especially on workplace and motor accident injury.
He said about 30 percent of insurance claims lodged were fraudulent in nature.
“Insurance penetration did not improve due to the low rate of growth; however, the sector has been conducting insurance education campaigns to bring insurance awareness to the masses,” Dyton said.
He said the Covid pandemic affected a lot of clients such that some companies either closed shop or scaled down on production capacity, hence reducing the need for insurance.
Further, according to Dyton, liquidity challenges from the impact of the pandemic resulted in other clients failing to pay insurance premiums on time.
“As a result, the insurance sector as a whole made a combined trading loss before investment income of K628 million as compared to a combined trading profit of K976 million in 2020,” Dyton said.
In a separate interview, Reunion Insurance Company Technical Manager Hastings Kapesa described the year as a mixed bag but was quick to mention that the company was able to register growth.
“We had challenges with debtors and the receivable which were very high but also fraudulent claims, but we are still growing and are able to get business despite tight competition in the market.
“Our premiums grew to K4.7 billion from K4.3 billion in 2020, our assets are now at K6 billion from K5.3 billion in 2020; so we are stable and solid as a company,” Kapesa said.
For More News And Analysis About Malawi Follow Africa-Press
