Large corporations in the mining and the construction sectors are still sourcing insurance services from abroad and violating the law, says the Pensions and Insurance Authority (PIA).

However, Zambia’s insurance industry recorded increased growth in net assets of around K7.7 billion in 2019 from K7.1 billion in 2018.

Meanwhile, the PIA have disclosed that it is expecting to raise about K1.3 million and K332,000 from the disposal of Focus Life Assurance and A-Plus Life Assurance, respectively, after both entities were placed under liquidation in 2017.

Speaking during a quarterly press briefing, PIA Registrar and Chief Executive Officer Christopher Mapani disclosed that multinational corporations in the mining and the construction sectors were still sourcing insurance services from abroad last year, violating the law and resulting in lost business and job opportunities within the local economy.

“It is worrying that most large companies in the mining and construction sectors have continued to source insurance services from abroad. This not only violates the law, but deprives the local insurance industry of business opportunities. The country is also robbed of the much-needed jobs and taxes. The Authority is, therefore, developing a large-risk register and will begin monitoring large risks,” Mapani said at the PIA head office in Lusaka, Monday.

But he announced that Zambia’s insurance industry recorded significant growth last year of around K7.7 billion in net assets, representing an around K600 million increase or eight per cent compared to the prior corresponding period in 2018.

“The pensions industry equally recorded growth in net assets. As at 30th September, 2019, net assets increased from K7.099 billion as at 30th September, 2018 to K7.685 billion, representing a growth of 8 per cent. The increase in net assets is attributable to improved investment performance, particularly from exchange gains, dividends from equity, property appreciation and interest from fixed deposits,” Mapani said
“As we reported earlier this month, as at the end of the third quarter of 2019, the insurance industry was on course to recording growth in both general and long-term (life) insurance with combined Gross Written Premiums (GWP) projected to exceed the K3.2 billion recorded in 2018. It is also noteworthy that as at the end of 2018, the pensions industry contributed around 6 per cent to GDP, while coverage was estimated to be 12 per cent of the labour force in formal employment.”

He observed that the insurance penetration ratio, relative to GDP, still remained low and expected to hit only three per cent in 2019.

“The insurance penetration ratio, expressed as a percentage of the national Gross Domestic Product (Gross Written Premiums to GDP) is also expected to increase from 2.2 per cent to around 3 per cent. Undoubtedly, however, this remains unsatisfactory and, to that end, deliberate regulatory reforms and other interventions, which I will be alluding to, have been put in place. The Authority is confident that these interventions will positively impact on the growth of the insurance sector,” Mapani observed.

Meanwhile, Mapani disclosed the amount of money to be raised from the disposal of Focus Life Assurance and A-Plus Life Assurance still falls below the amount required to settle outstanding claims.

“As you may recall, the Authority in 2017 placed Focus Life Assurance and A-Plus Life Assurance Limited under liquidation. These two liquidations affected in excess of 1,800 policyholders under Focus Life Assurance and 780 under A-Plus Life Assurance, respectively. The total value of policyholder liabilities is estimated at K7.51 million in respect of Focus Life Assurance and K1.92 million for A-Plus Life Assurance. The Authority anticipates to raise about K1.3 million from the disposal of Focus Life Assurance assets and K332,000 for A Plus Life Assurance. Evidently, the proceeds from the sale of assets are insufficient to meet the outstanding claims,” Mapani said.
“The foregoing notwithstanding, the Authority intends to commence partial payments of claims by March 31, 2020. Part of the shortfall may subsequently be offset from the Insurance Fidelity Fund. Payment modalities will be communicated in due course. We, therefore, appeal to claimants to wait for further guidance from the Authority.”

He added that policyholders affected by the liquidation of Windsor General Insurance Limited would be invited to lodge in their claims.

“I wish to announce that, in an effort to protect policyholders by ensuring that they qualify to access the Fidelity Fund, another insurance company, Windsor General Insurance Limited (formerly Focus General Insurance), was placed under compulsory liquidation on January 2, 2020, on account of failure to meet solvency requirements as provided under the Insurance Act. It must be noted that the company was not licensed in 2019 and subsequently failed to recapitalize. The Authority is currently taking stock of the company’s assets and liabilities and policyholders and creditors will be invited to lodge their claims in due course,” said Mapani.