Mapipo urges African insurers to design appropriate products
Written by Nchima Nchito Jr
Friday, May 08, 2009 5:31:53 PM
AFRICAN insurers and intermediaries have a heavy responsibility of improving the general standard of living of the continent, registrar of Pensions and Insurance Authority (PIA) Chris Mapipo has said.
During the Organisation of Eastern and Southern African Insurers (OESI) training seminar in Lusaka yesterday, Mapipo said this could be done through financial intermediation role and designing appropriate insurance products.
“The fact that the world is experiencing the worst global financial recession means that the demand on the insurance industry for higher coverage across a wide range of risks will most likely increase, yet clients’ capacity remains limited,” he said. “Africa will sooner than later demand much more capacity than its present share globally.”
Mapipo added that there would be increased demand for specialist insurance products within the OESI largely due to increased trade and infrastructure development.
“Building up the talent pool of experienced and highly competent underwriters, claims managers and brokers in these specialised areas is key success factor,” he said.
He said the role of insurance intermediaries had also evolved.
“From the traditional role of matching and placing of insurance risks for their client with insurers and reinsures, insurance intermediaries have moved up the value chain to essentially provide enhanced services in order to remain competitive and relevant,” Mapipo said. “The risks faced by their clients have become much more complex given the expanded business markets beyond traditional boundaries.
Underwriters and the insurer’s intermediaries alike have had to keep up, not only in understanding the developments within their client’s areas of operation but also complex nature of the potential risks exposures that their clients face. Only then can they provide value added risk management and insurance services.”
Mapipo expressed hope that the insurance sector would rise to the current economic challenges.
And OESI chairperson Irene Muyenga said the main challenge faced by the organisation was re-capitalisation and the enhancement of its capacity in order to handle huge risks.
Labels: CHRIS MAPIPO, GREAT DEPRESSION II, INSURANCE
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State to cement insurance industry
By Business Reporter
THE Government is in the process of finalising institutional investment guidelines to provide benchmarks in the local insurance industry, Pensions and Insurance Authority (PIA) registrar, Chris Mapipo has said.
Mr Mapipo said the fact that the Government had included the social protection and social security chapters in the Fifth National Development Plan was testimony to the importance that it attached to the industry.
He said during the launch of the Pension Bridge Magazine in Lusaka at the weekend that the schemes were positively contributing to the development of the financial and capital markets.
“The Government has also allocated some slots for the association to be represented on a number of boards, such as the Pensions and Insurance Authority board,” Mr Mapipo said.
Speaking at the same function, Zambia Association of Pension Fund Managers (ZAPFM) president, Charles Mpundu said increasing competition in the pensions and insurance industry should be encouraged to grow because it was leading to improved service delivery and increased returns on investments.
Mr Mpundu said the competition had led to better service delivery mechanisms and a call for improvements in benefits levels.
He said there had been improved regulatory input by the Government, through the PIA, which had helped to wipe out the negative image about the sector.
Mr Mpundu said that investment management skills in the industry had improved, resulting in better returns being earned on pension savings.
The pension fund management institutions had also been very active in the capital market, as they have been leading in equity investments in the stocks of the listed companies on the Lusaka Stock Exchange.
“The various pension schemes, as contractual savings, continue to play a significant role in the development of the capital markets,” he said.
Mr Mpundu said the assets under the various fund managements and administrators had increased significantly over the year, and stood at K1.8 trillion in 2008, excluding the funds under the National Pension Scheme Authority.
Those successes notwithstanding, the pensions industry continued to face various challenges especially relating to late settlement of pension benefits to the beneficiaries and the fact that many pensioners receive very little returns to sustain their livelihood.
He said the Government would do well to provide incentives, especially those relating to taxation, in order to see more enthusiasm in the pension industry.
“Thus, the bad image of the past is really changing, especially if Government provides the tax and other incentives that the industry has been crying for,” Mr Mpundu said.
On the launch of the magazine, he said it had been the wish of the pension fund managers to provide more information to different clients and the general public, and the pension bridge would provide insightful updates to all the stakeholders.
Labels: CHRIS MAPIPO, INSURANCE, PIA
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ZAPFM seeks to create debate through magazine
Written by Kabanda Chulu
Monday, May 04, 2009 2:44:05 PM
ZAMBIA Association of Pension Fund Managers (ZAPFM) has launched a magazine aimed at creating a forum for debate on pension provision, processes and procedures on the payment of pension benefits.
And Pensions and Insurance Authority (PIA) registrar Chris Mapipo has challenged ZAPFM to consistently produce its magazine because the broad membership and pension institutions are not knowledgeable about their pension rights and other related matters.
During the launch of the quarterly magazine titled The Pension Bridge in Lusaka on Friday, ZAPFM chairman Charles Mpundu said the association has identified that poor flow of information was a critical component affecting service provision.
"This is where the Pension Bridge comes in and it has been designed to bridge the information gap between all pension stakeholders and it will also serve as a forum for debate on pension provision and services," Mpundu said.
He said the pension industry has continued to face several challenges and to many people the word pension reminds them of the many years of working.
"Sadly, in many cases, the pensioners receive very little and too late for their many years of working by way of income as the pension are in a lot of cases unable to sustain their livelihood but the good news is that the industry is changing in a number of ways," Mpundu said. "These include, the increased competition in the industry is leading to better service delivery and a call for improvements in benefit levels, more and better pension products are being introduced and improved regulatory oversight has strengthened the sector hence the bad image is rapidly changing and if government provides tax incentives, hopefully the challenges will be a thing of the past."
And Mapipo said the government attaches great importance to initiatives that were meant to share information and experiences among the stakeholders.
"It is said that 'knowledge is power' but the broad membership and pension institutions are not knowledgeable about their pension rights, processes and procedures on the payment of pension benefits so it is imperative for ZAPFM to meet this challenge by consistently producing the magazine," said Mapipo.
"Also government is in the process of finalising institutional investment guidelines that will provide specific benchmarks in the industry."
Labels: CHRIS MAPIPO, PENSIONERS, PIA, ZAPFM
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Underperformance stocks affects institutional investors
Written by Kabanda Chulu
PIA Registrar Chris Mapipo on Thursday said the underperformance of stocks at the Lusaka Stock Exchange (LuSE) has affected operations of institutional investors who have pumped huge amounts of money at the stock market.
During a media briefing in Lusaka to explain the objectives of the Pensions and Insurance Authority (PIA) in the country, Mapipo said the industry in general had performed well and had been growing on an average of 24 per cent for the past eight years.
"Generally we have been performing well but the economic crisis has not spared any country because of linkages in that some assets especially for the mines are insured abroad hence being exposed," said Mapipo. "Locally we have minimal impact unless for those companies that have re-insured abroad and may experience difficulties if those assets are severely affected but to an extent, we have felt the global economic crisis with the underperformance at LuSE since most institutional investors are our members and their operations have been affected."
The PIA regulates two components of the industry that is, the insurance and the pension sub-sectors. The insurance sub-sector recorded a national turnover of K801 billion in 2008 as compared to K626 billion in 2007.
However, net assets under the national pension category declined from K1.9 trillion in 2007 to K 1.8 trillion last year.
The PIA is a quasi-government institution under the Ministry of Finance and National Planning with a mandate to regulate the conduct of the pensions and insurance industry through prudential supervision in order to protect the interest of pension scheme members and insurance policy holders and to foster the industry’s growth, development and stability.
Labels: CHRIS MAPIPO, GREAT DEPRESSION II, LUSE, PIA
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ZSIC subsidiaries don’t qualify to be licensed as insurance companies, says Mapipo
Written by Chibaula Silwamba
Friday, January 02, 2009 3:07:57 PM
THE Pensions and Insurance Authority (PIA) has revealed that Zambia State Insurance Corporation (ZSIC) subsidiary companies do not qualify to be licensed as insurance companies because of some irregularities contrary to the law.
And PIA registrar Chris Mapipo has queried ZSIC for abrogating the law by appointing a person who does not meet the requirement of 10 years experience in the insurance industry as its managing director for the ZSIC Life Company.
According to Mapipo's letter dated December 26, 2008 to ZSIC Limited managing director Irene Muyenga and obtained by The Post in Lusaka, PIA issued the licences to ZSIC Life Company and ZSIC General Insurance Company with “great reluctance” but with strict instructions that ZSIC normalises all the issues it was queried on by March 31, 2009 latest.
“Firstly, we wish to advise that the mandate for you to operate as a composite insurance company expired on 23rd December 2008. This entails that you no longer have the capacity to enter into or sustain an insurance contract from that date,” stated Mapipo in a letter copied to Ministry of Finance permanent secretary Dr Wamundila Mbikusita-Lewanika and PIA board chairman Smart Phiri.
“The three year period granted to Zambia State Insurance Corporation Limited to reform itself has certainly been sufficient time for you to have transferred all contractual obligations to the two separate insurance companies that have been formed.”
On share capital, Mapipo stated that all entities licensed by PIA submit copies of their bank statements as proof of capitalisation.
“Kindly ensure that the relevant bank statements are submitted by 31st December 2008,” he stated. “Your company was given a list of our licence requirements. The schedule clearly indicated that the business plan must show three years projections of the balance sheet, profit and loss account and revenue accounts. We are at pains to understand why despite the three year grace period you are unable to submit these details.”
Mapipo stated that ZSIC's submission on the matter was incomplete.
“We wish to advise that this is probably the first time we are having problems accepting a business plan from an existing insurer. Kindly ensure that a proper plan is submitted by 31st January 2009,” Mapipo demanded.
Mapipo also expressed dissatisfaction with the submission on reinsurance.
“Your submission on this point raises great concern. Zambia State Insurance Corporation Ltd ceased to carry out business on 23rd December, 2008.
In the circumstances, the new insurance companies need to arrange their own reinsurance programmes for the risks that they will carry. They cannot rely on the contracts entered into by the holding company for the entire first quarter,” Mapipo stated. “If indeed there is an understanding that the reinsurers of the holding company will provide cover for the newly formed companies, this must be evidenced in writing.
As you are well aware, Section 102 of the insurance Act especially requires insurers to submit reinsurance treaties or reinsurance programmes to the authority. It is of great concern to us that there is no evidence of reinsurance protection for the first quarter of 2009. Given the time that you have had this should have been done in time. Kindly ensure that this is carried out by 31st January 2009.”
And on the appointment of a chief executive officer/managing director of ZSIC Life Company, Mapipo noted that the law was very clear and PIA would not allow any person who does not meet the requirements to take up such a position.
“The provisions of Section 26 (4) (b) are binding and cannot be altered by my office. Kindly ensure that you appoint an individual with the required experience by 31st March, 2009,” stated Mapipo in reiteration to his earlier letter dated November 26, 2008, in which he wrote:
“The proposed chief executive officer does not meet the 10 years experience required under Section 26 of the insurance Act. The Act does not provide for a separate officer. The chief executive officer is the principal officer of the company.”
Mapipo demanded that ZSIC complies with the law.
“It is with great reluctance that we, therefore, grant you the licences for your subsidiary companies. From what is outlined above, your companies do not qualify to be licensed.
However, in the interest of the nation and hoping you will be compliant, the licenses have been issued. Kindly take our observations and deadlines seriously,” Mapipo stated.
“Licence numbers 0049 and 0042 are issued respectively in favour of Zambia State Insurance Corporation General Limited and Zambia State Insurance Corporation Life Limited.”
In his earlier letter dated November 26, 2008, Mapipo stated that his office acknowledged receipt of an application for a long term insurer's licence submitted by ZSIC for its subsidiary company [ZSIC Life Limited] but PIA could not make full analysis of the application because ZSIC did not supply adequate information.
“The application form for a licence needs to be signed by a director of the applicant company. In the application form that has been submitted, this has not been done. No three year business plan has been submitted. There is no evidence provided to show that share capital has been paid for. A list of all assets and liabilities of the company needs to be provided as required by Section 10 of the insurance Act,” Mapipo stated.
“Employees listed as branch managers are the same as those listed under Zambia State Insurance Corporation General Ltd. The employees cannot work for two insurance companies.”
Mapipo further demanded that there was need to clearly outline the services that would be covered by the holding company [ZSIC Ltd] and the terms of engagement.
“I would further suggest that you consider holding on to your plans to launch the company until full compliance is met,” advised Mapipo.
But ZSIC company secretary Anock Mbambala said ZSIC had resolved all the queries that PIA had raised.
“Those were preliminary enquiries that PIA was making during the split period. After that letter [of November 26] we clarified all those [queries]. That is why the licenses were granted. Naturally, during the preliminary process, there is that interchange of ideas. They were enquiring on certain things and after some discussions and write ups all those were clarified. Eventually they issued a licence…I think that was two or three days ago,” Mbambala said.
Asked about the query on the managing director of ZSIC Life Company who does not meet the qualifications, Mbambala responded: “Even that we discussed with PIA and it was resolved. It was one of the issues that they raised.”
Further asked if ZSIC had found another person with 10 years experience required by law or it had maintained the same appointee, Mbambala said that the appointee was suitable.
“He is actually suitable.
There was just some misunderstanding…he has the 10 years experience. This is an individual who was working for…I think Stanbic [Bank] for five years then he worked for African Life Assurance for another five years and then he has worked with us,” said Mbambala.
However, Mbambala's argument contradicts the law because the insurance Act requires that the appointee to the position of managing director/CEO of an insurance company should have 10 years experience in the insurance industry and not any other field.
ZSIC has transformed into a holding company called ZSIC Group of Companies or simply ZSIC Limited, which would manage two subsidiary companies - ZSIC Life Company and ZSIC General Insurance Company.
Labels: CHRIS MAPIPO, INSURANCE, PIA, ZSIC
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