Insurance Institute of Zambia

 SALUTATION

 I'm honoured to address the Second Annual General meeting of the Insurance Institute of Zambia.

 I recall that the Institute bestowed me with a similar honour during its First Annual General Meeting held in Ndola.

Allow me, at this point, to recognise:

v  The President of the Insurance Institute of Zambia, Mr. Justin Kabwe and his entire Governing Council

v  Deputy Registrar, Pensions Mr Martin Libinga and PIA Staff

v  The Directors and Chief Executive Officers of various Licensed Insurance and Pensions Entities

     present or ably represented here

v  The Esteemed pioneer members of the Insurance institute of Zambia, and

v  May I simply say Distinguished invited ladies and gentlemen

v  All protocol observed

It gives me great pleasure to witness the Insurance Institute of Zambia as it grows from strength to strength.

From what was a mere tea-break discussion idea in most insurance offices across the country a few years ago,

TODAY we are here to witness as the institute finds its feet and its right place in the industry.

Ladies and gentlemen, members of the institute, the journey ahead is still long and in fact it will at times

be very rough. Nonetheless, the first steps taken so far are the most significant and I am very confident that

 you will reach your goal of attaining excellent professionalism in this industry.

CURRENT CIRCUMSTANCES

Empirical evidence available has shown that the Global Financial crisis has already had a negative impact

on Africa in terms of decreased investments, decreased exports and decreased employment levels.

On the African Continent's insurance sector, the crisis has led to;

Ø A decrease in demand for insurance" services and capital available for insuring risks on international markets

Ø    Difficulty in renewing treaties related to insurance placement

Ø    Higher premiums for re-insurance ~ Low up take of insurance-

insurance penetration is consistently below 5% of GDP(With the exception of Gabon,

South Africa and Lesotho); Africa's share in the Global Insurance market was 1 .69% in 2007

Ø    Large proportion of the population falls into low income category which implies a limited disposable

income for insurance products

Ø    Large reliance on compulsory based insurance products like third party motor vehicle insurance

and credit life Insurance ~ In adequate financial capacity and poor corporate governance practices

Reflecting on the local market the story is no different from that obtaining in Africa. However PIA has

 witnessed a phenomenal growth in the past 7 years:

·         The insurance industry has grown in terms of turnover volume; from K180 billion in 2001 to K800 billion

 in 2008, more than 300%

·         It has grown in terms of the quantum of claims settlement into the

economy; from K42 billion in 2001 to K208 billion in 2008

·         It has grown in terms of the profits posted and dividends paid to shareholders;

·         It has grown in terms of the number'of licensed insurers and reinsurers; from 6 insurance companies in

      2001 to 12 in 2008

·         It has grown in terms of the sheer numbers of licensed intermediaries plying

·         the market; from 112 in 2001 to 140 in 2008

·         It has grown in terms of the salaries and wages paid to employees of various insurance entities.

Sadly, ladies and gentlemen, the numbers of qualified practitioners has not grown proportionately

over the past (7) seven yea rs:

§  In fact the number of qualified loss assessors has been falling during these 7 years;

§  The number of practicing loss adjustors has remained at only 2 during these 7 years;

§  The industry has not produced a single Zambian actuary during the past 7

      years.

As a regulator we are saddened to observe that at the time the growth indicators are so impressive we a

re faced with a diminishing cadre of insurance professionals. This is a threat to the growth.

Many an investor into the insurance industry cannot find suitably qualified underwriters to ably run their

 insurance business enterprise. The PIA has in the past 7 insisted that the position of Chief Executive Officer

be first availed to Zambians before other nationals can be considered but our pool of insurance professionals

is very shallow and is quickly running dry due to:

·         Inevitable attainment of retirement age

·         Natural and unnatural wastage due to various pandemics.

·         Dishonesty - the demonstrated failure to uphold utmost good faith and integrity

CHALLENGES FACING THE INDUSTRY

In order for the growth of the insurance sector to be meaningful to ordinary men and women in this country

it must be sustained. It must be consistently sustained by a vibrant and determined cadre of insurance professionals.

It is at the juncture that the efforts of the Insurance Institute of Zambia and those of the

Pensions and Insurance Authority coincide. The serious urgency of this matter cannot be postponed

to another time other than now.

The following are some of the challenges that as professionals you need to address and contend with:

Ø  The institute must begin to promote the insurance profession by engaging high school curriculum

developers and the careers guidance unit of the Ministry of Education.

Ø  Create insurance awareness among the greater number of people to overcome the market's natural

resistance and educational barriers

Ø  Attain consistency with the International standards as prescribed by international professional bodies

Ø  Strengthen the insurance regulatory structures and harmonise laws in the face of growing cross border

investment and transactions

Ø  Financial restructuring including recapitalization of insurance companies to enhance underwriting capacity

Ø  Adopt strategies for creating inclusive insurance(microinsurance to reach the informal sector and to meet

the needs of the market for affordable insurance products.

Ø  Stop the senseless externalisation of premiums abroad as this practice is depriving this Country the

necessary needed resources for national development. In the past three years (2006-2008) Zambia has

externalised K474-9 Billion in reinsurance premiums.

WHAT IS THE WAY FORWARD

The way forward to mitigate some of these challenges will include;

Ø  Building institutional and human capacity in the industry

Ø  Promoting the establishment of pension and insurance syllabi at primary, tertiary and high learning

 institutions and upgrading the existing learning institutions

Ø  Promote a deliberate policy by the industry to contribute to the running of the training institutions

Ø  Compiling and sharing insurance statistics to provide reliable data for actuarial studies which are essential

in developing new insurance products

Ø Strengthening the financial capacity of the existing insurers through increased capitalisation to enable them

 operate soundly and compete effectively

Ø Encouraging entry of more insurers -with substantial financial strength, technological and industry know how,

good risk management, and financial management skills

Ø Adopting a robust proactive policy on micro insurance, the broader goal of the financial inclusiveness

Ø Establishing a forum to monitor the developments in the insurance and to continue the dialogue among

stakeholders in the industry

The insurance practice cannot continue to slumber but must awaken and equate itself to other professions

that maintain robust accreditation systems and engage in continuous professional development (CPD).

The Pensions and Insurance Authority regrets to note that some of our own nationals that have been elevated

 to senior management positions have failed to live up to their employers' expectations. Often because they

have tended to sit back in contentment with the qualifications attained several decades ago.

The field of insurance is dynamic as such its practitioners cannot afford to stagnate in contentment.Clearly

 a professional that does not undertake continuous professional development risks being left by the wayside

as the insurance industry continues to evolve.

Any profession will only gain as much recognition as they rightfully earn. It is therefore timely for the

institute to get organised prior to considering statutory recognition comparable to that bestowed the

 Law Association of Zambia and the Zambia institute of Chartered Accountants.

The institute should be able to clear its members for all jobs in the industry to stop this invasion by

non-insurance professionals.

Ladies and Gentlemen’s, The Pensions and Insurance Authority keen awaits the institute

to play its role in encouraging sustainable professional development. I expect quantum growth in the

number of high flying insurance innovators with unblemished professional

integrity - for these are the attributes that the insurance profession is recognised for internationally.

In my concluding remarks allow me to quote what the former president of the Republic of Tanzania

His Excellency Benjamin William Mkapa said when he was being conferred with a Honorary Doctor

of Law Degree at the National University of Lesotho on 23rd September 2005.

"Firstly, Africa is increasingly being marginalised from the benefits of globalisation. In 1950 our

share of global trade was 3 per cent. Today it is hardly 2 percent. It is us Africans who need to

re think our situation and come up with innovative solutions to re engage profitably into the global economy;

Secondly, Africa is playing in a game where the playing field is not level, and the rules of the game were

established long before we became independent players. We Africans need to rethink how to

make the best out of this unfair situation" End of quote.

I wish the institute and all its membership especially with those being conferred with

professional designation unfettered success!

I thank you for your patience.

xxxx