Financial meltdown hits insurance sector

Financial meltdown hits insurance sector
Written by Mutuna Chanda in Ndola
Sunday, July 05, 2009 4:28:04 PM

ZSIC Group of Companies managing director Irene Muyenga has said the insurance industry is feeling the pains of the global financial meltdown. And commerce minister Felix Mutati said the government would this year implement reforms that would reduce business licences from 517 to 290 under the first phase.

Speaking during a ZSIC cocktail on Friday evening at the ongoing 44th Zambia International Trade Fair (ZITF), Muyenga said firms in the insurance market were finding ways of staying afloat.

“Products in the Life category are becoming increasingly difficult to sell as prospective clients opt to use their income on household goods rather than buy life insurance products,” Muyenga said. “As for general insurance products, we have seen a general decline in the risks being covered as most of the clients opt for the cheapest products or not insure at all in order to reduce costs.”

She said ZSIC Group’s new strategic focus would be targeted at additional investment opportunities in infrastructure with more emphasis on multi-purpose property.

“These will be modeled to include business, leisure, retail and residential space among other ventures,” she said. “In anticipation of this growth, the group has created higher and broader underwriting capacities both internally and externally in conjunction with our reinsurance partners. We also intend to bring the un-insured in the informal sector on board through the provision of micro-insurance. By the term un-insured we refer to the marketeers, bus drivers and conductors, traders, SME’s and many others.”

She said ZSIC planned to set up micro financing and asset and property management companies in the medium term.

“Our ultimate goal is to have the Group listed on the Lusaka Stock Exchange by 2011,” said Muyenga.

And Mutati said the reduction on the number of licences would cut by 30 per cent on the compliance costs which stood at K2 trillion.

He also said that K1.3 trillion could be channelled to job creating investments if ZSIC and the pensions funds worked together to unlock their investments.