Felix Mlusu 41 Years of Distinguished Service

The Biannual Magazine of the Insurance Institute of Malawi Issue 1 2016

FELIX MLUSU 41 YEARS OF DISTINGUISHED SERVICE

2016 Issue 1 | Malawi Insurance Times 1

Contents

Contacts Insurance Institute of Malawi MDC House Sir Glyn Jones Road P.O. Box 2040 Blantyre, Malawi Tel: 01 835 169 28 www.iim.org.com Climate change and the insurance Editorial & Advertising Team 09industry in Malawi Editor Chimwemwe Kanyenda Meet the African woman set to head UK Editorial Team 11actuaries institute Immaculate Kachapira Peter Kambalame Charter Dinner 2016 Advertising Chimwemwe Kanyenda 17 0999 934 912 The eye of a storm reveals your strength Graphic Design Graphic Elements 22 0888 367 379 Interview with insurance veteran, 28Felix Mlusu

DISCLAIMER

The Malawi Insurance Times, a Real Insurance rebrands to Britam Insurance premiere biannual magazine, is 36 published by the Insurance Institute of Malawi (IIM). Opinions expressed in the Malawi Insurance Times are IIM Annual Conference 2016 the personal opinions of the original 40 authors and do not necessarily reflect the views of the Insurance Institute of Malawi and the editorial team. The Insurance Institute of Malawi assumes no liability or responsibility for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.

All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical without prior permission in writing 11 09 from the Insurance Institute of Malawi. 2016/2017 COUNCIL MEMBERS

Victor Mhone Chikondi Siliya HONORARY TREASURER ACII Peter Kambalame EDUCATION SECRETARY Bsc; Msc (mgt) VICE PRESIDENT Immaculate Kachapira ACII PRESIDENT

Sheilla Khombeliwa Golden Jamu David Masasa BBA, ACII BA BBA; Dip CII VICE EDUCATION EVENTS OFFICER VICE EVENTS OFFICER SECRETARY

Chimwemwe Kanyenda Maclonex Mwase Julius Nyambo BEd; Dip CII ACII BA; LLB (Hons) EDITOR MEMBER LEGAL COUNSEL

Rex Kadzongwe BBA; ACII IMMEDIATE PAST PRESIDENT

Vieson Thawani BA; ACII MEMBER

4 2016 Issue 1 | Malawi Insurance Times Editor’s Note

elecommunication firms and service providers are redefining Africa’s insurance landscape, through Ttheir brand recognition and wide customer reach to offer micro-insurance products to a myriad of uninsured Africans. The continent’s largest mobile telephone network operators, such as Airtel, Safaricom, Tigo, MTN and Vodacom, are fiercely battling it out to expand their customer base via innovative business models that rival the traditional premium payment systems popular in the West. In the insurance sector, mobile money has significantly facilitated growth in micro insurance, which involves the provision of services to low and middle- income earners. Microinsurance products are typically low-premium, with low coverage limits that seek to prevent low and middle-income earners from reversion into poverty. Mobile network operators have revolutionised microinsurance because of the convenient access available through their telecommunication infrastructure. Through this infrastructure, microinsurance providers are able to receive premiums from customers and settle claims through mobile wallets. In 2013, TNM, (a leading local Mobile network operators have revolutionised telecommunications provider) established a strategic partnership with NICO Life microinsurance because of the convenient access Insurance Company Ltd, (a giant in the available through their telecommunication infrastructure. domestic life insurance industry) and MicroEnsure, (a recognized leader in the provision of insurance for the mass market in Africa and Asia) to find a solution to this challenge by providing Malawians with access to free life cover. Any TNM Mobile phone user, hereinafter environment is on the horizon. What’s both life and non-life. It is crucial that Malawi referred to as MPU, aged between 18 and 75 unclear is the nature and availability of those gives careful consideration to the immense under Mpamba Mobile Money service can channels. Nonetheless, it does seem fair to value of bancassurance as a vehicle to grow register and with not less than MWK1000 expect that the future of insurance will have the presence and use of insurance within the TNM airtime usage per month, one can to support a multi-distribution environment, community. get a free life cover. This product is being catering to increasingly sophisticated On a different note, climate change is a distributed by TNM and provides 30-day consumers who want to buy direct, who may global issue of a scale, severity, and potential free life cover to a MPU and one registered want do their own research, or who may want irrevocability that society has never before beneficiary. to use advocates or brokers in an exchange to experienced. An article “Climate change and The MPU needs to just keep using TNM conduct the comparative samplings. the insurance industry in Malawi” advances airtime of not less than MWKI, 000 per month Given the fact that the future distribution that increased frequency and severity of to get the cover. Should a MPU’s airtime landscape certainly will be different, insurers major weather events mean that climate usage fall below the minimum spend level, need to become the efficient marketers and change has increased the risks and costs of no cover will be provided in the following maximize their distribution opportunities insurance. This sobering conclusion points month. while becoming nimbly able to respond to our new and emerging reality; this is not Strategic collaborations between mobile to all of them. One thing that is assuredly another cyclical period of temperature change network operators and insurance providers true is that insurers will be using a variety but a future of constantly evolving and result in the recording of transactional data of different methods of distribution for the increasingly challenging climactic conditions. which provides insurance practitioners with foreseeable future, and what will matter as The Veteran Section features former reliable and available data which can be used much as or more than the specific methods Managing Director of NICO Holdings, Felix to design and price new products, especially employed is how well they align with a n Mlusu, whose illustrious and stellar career those targeted at low and middle-income insurer’s own unique strategy and how good has spanned over four decades. earners. The benefits of such co-operation a job it does of execution. Overall this issue includes insightful only enhance over time with increased uptake In this issue, a piece titled “Bancassurance” articles which we believe will be of immense of insurance products hence opening up a examines the impact of the alternative value to you the reader. bigger pool of data. Insurance companies may distribution channel of Bancassurance in the also ride on the trusted brands of established insurance industry. There can be little doubt, mobile networks operators to launch various if any, of the relative value of the potential Chimwemwe W. Kanyenda insurance products. for bancassurance to open the path toward It’s clear that a multi-distribution cost-efficient access to insurance products,

2016 Issue 1 | Malawi Insurance Times 5

President’s Note

steemed members of the Insurance Institute of Malawi, welcome to the first edition of the Insurance Times EMagazine for the year 2016. It is really a great honour to be elected President of the Insurance Institute of Malawi for the period 2015/2017. During the Annual Charter Dinner in February this year, when the new Executive Council was unveiled, we made an undertaking that we will remain steadfast and committed in serving the membership. The Institute’s core mandate is to promote professionalism in the insurance industry through education and training and, without prejudice, to maintain a sound, vibrant and stable insurance industry.The Executive Council, therefore, has a responsibility of making sure that the thirst for knowledge is satisfied in the industry. Knowledge is power so they say, but I can also add that the use of knowledge is greater power. In a quest to fulfil knowledge transfer and dissemination to the membership, the Executive Council lined up a number of activities to be conducted in the year 2016, a calendar of which was circulated to all “...I am pleased to inform you that our Annual Lake members. Some of the activities have already Conference took place from 18th to 20th August taken place. The Institute held a Corporate Governance practical and interactive training under the theme “Delivering our Promise” from 8th to 9th June 2016 for insurance firms seeking to improve or implement corporate governance best practices. Research has shown that a well-governed that have passed their Chartered Insurance Old Mutual, our quiz sponsor and partner company performs better in the long run. To Institute exams in the April 2016 sitting. for the past five years will continue supporting address the challenge of providing a clear Faced with a pass rate of 46%, we managed to the competition that tests the knowledge of understanding of corporate management, produce 3 Chartered Insurers and all I can say our young scholars on insurance matters the course provided participants with key is congratulations to the qualifying candidates. and other related topics. It is always an concepts and how this understanding can be Let me encourage members to take a serious exciting event where young professionals turned into best practices that add value to approach towards their studies so that we showcase their skills and knowledge base. the company. become an industry of professionals. I also We are grateful for the five-year sponsorship. The Institute, in collaboration with Equity would like to encourage those who didn’t We create our action plan with confidence Reinsurance Brokers also arranged a Risk pass not to give up and those who are afraid because we know we have a trusted partner. Management Seminar on 3rd June, 2016 to take exams to start enrolling and studying. Many more activities and trainings will whose aim was to help members of the On a different note, I am pleased to take place this year and I urge you members industry underwrite risks appropriately. It inform you that our Annual Lake Conference to gear up and partake of these events. was a refresher to the practitioners of the key took place from 18th to 20th August under To you Principal Officers, just like I said function of the underwriter; to protect the the theme “Delivering our Promise”. The during the Annual Charter Dinner, the company’s book of business from risks that insurance sector has a long way to go in Executive Council will not take for granted they feel will make a loss and issue insurance developing sufficient trust by the public.We the responsibility placed on it by members of policies at a premium that is commensurate need to emphasize to the insuring public the industry.We promise to serve the interest with the exposure presented by a risk. that the indemnification and risk pooling of all the members. We will be transparent The Sports Day was another fruitful properties of insurance facilitate commercial and make sure that every member benefits event that saw members and their families transactions and the provision of credit by from the activities organized by the Institute. coming together to interact socially. As the mitigating losses as well as the measurement I would like to place on record our sincere majority of you may be no doubt aware, the and management of non-diversifiable risk appreciation for the material and moral Insurance Institute of Malawi 2016 Sports more generally. Among other things, this support insurance firms offer to the Institute. Gala took place on 25th June at College of income smoothing effect helps to circumvent Let me assure you that we will account for Medicine Sports Complex. The IIM Sports disproportionate and costly bankruptcies each and every penny and will not hesitate to Festival allows the insurance community and facilitates lending to businesses. take action if things are not going on well. The to participate in recreational activities in Most fundamentally, the availability of Institute’s door is open and let me encourage an organized competitive atmosphere. By insurance enables risk averse individuals members to bring in new and innovative ideas participating in one of our many activities, and entrepreneurs to undertake higher risk, to promote our industry as well as providing we aim to provide you with the following higher return activities than they would do in guidance and advice wherever you see that opportunities: develop social relationships, the absence of insurance, promoting higher it is needed. encourage good sportsmanship as well as productivity and growth.In that vein, we maintain health and fitness. All in all, the lined up a number of high profile speakers Immaculate Kachapira Sports Gala was a success story! to tackle difference topics in line with our I would like to congratulate members theme.

2016 Issue 1 | Malawi Insurance Times 7

Climate change and the insurance industry in Malawi: cost of increased risk and the impetus for action By Wales Meja ACII- Chartered Insurance Risk Manager

The floods in lower Shire that claimed more than 100 lives in 2015 and massive destruction of property and the recent persistent heavy rains experienced in the northern region that resulted in some deaths and property damage is a clear example of the effect of climate change. As climate change has effects on policy holders; it also has impact on the sustainability of the insurance industry. The availability of insurance is premised upon two factors, being the “ability of the insurance industry to finance risk and the expectation that the insurance underwritten will be profitable”. The Malawi insurance industry therefore needs to wake up to the threat that climate change poses to its profitability. Some analysts are asking a far more significant question: if the majority view among climate scientists proves correct, how much worse might the future be? Among shareholders and other stakeholders, there are real fears for the very future of stable insurance market should current climate ne of the biggest debates in models prove accurate, or even worse - recent years has been the issue underestimated. of global warming and the There is therefore a great need for an effect it has had on climate overhaul of the way business is conducted O The Malawi by the insurance industry. Some of change. While this has affected other sectors of society, its effects are starting to insurance industry the suggested changes might include be felt in the financial services in Malawi, substantially increasing deductibles, a the insurance industry in particular. therefore needs reappraisal of excess-of-loss arrangements Insurance companies are deeply affected between insurers and reinsurers, increased by climate change in their core businesses. to wake up to the use of coinsurance, an attempt at realistic In fact, insurers in other countries in the rating (though this will prove difficult in world have had to pay huge insurance threat that climate our current market where there is intense claims because of damage caused by change poses to its undercutting), selective withdrawal of climate change. It is generally considered cover, and other measures. that climate change is a serious threat profitability. Though our current insurance confronting the global insurance industry legislation in Malawi makes no provision over the medium to long term. for addressing risks arising from the effects Insurers have been concerned about the of climate change, despite this lack of impacts of climate change for many years. guidance there are various measures that The first reports appeared in the 1970s, intensity and frequency of adverse weather insurers can adopt in order to mitigate or with leading international reinsurers conditions. avoid the risks posed by climate change, discussing a potential rise in natural Weather conditions such as flooding, These might include but not limited to; disaster losses due to a changing climate. hail and drought can affect a policy • Risk assessment will need to include Since then, several insurers/reinsurers holder’s insurable assets. Climate change climate change as a component in its have undertaken climate-related activities therefore creates risks to both movable and management of future risk. When such as research collaborations with the immovable property and one of the biggest assessing risk, weather patterns and science community, raising awareness problems for insurers is how to underwrite their potential effect on an insurable with clients and the general public, as well the additional risks that climate change asset must be a component in an as conducting internal reviews of risks and brings. underwriter’s estimation of future opportunities from climate change. While there are still many people who risks. Climate change is altering weather do not believe in global warming, it is patterns and causing an increase in the hard to turn a blind eye to climate change. To page 10

2016 Issue 1 | Malawi Insurance Times 9 From page 9 Are insurance companies starving amidst plenty?

By Mphatso Kamzingeni-Zulu

alawi’s economic and marketplace developments suggest a continuation of The insurance Mchallenging and highly competitive conditions for the country’s penetration rate in small but growing insurance industry. Faced with turbulent economic conditions Malawi is among the (both globally and locally), high unemployment rates and low GDP (gross lowest in the world domestic product) rates, among other and in Africa, with the challenges, business risk and uncertainty remain high, thereby presenting a market average rate over the that is confronted by contradictory signals of opportunities and challenges. last 5 years hovering While market demand is evolving albeit at a slow pace, competition is increasingly around 2.8% to high, driven by the accelerating influence of 3.5%.This is quite large multinational and global participants and an increased number of contestants on low given that the • Pricing will need to reflect the the local scene. underlying weather-related risks. The insurance penetration rate in country’s population In this way, insurance companies Malawi is among the lowest in the world can influence their customers to and in Africa, with the average rate over currently stands at reduce their exposure to climatic the last 5 years hovering around 2.8% about 18 million. risks through the differentiation to 3.5%.This is quite low given that the in the pricing of insurance country’s population currently stands at premiums. By way of example, about 18 million. a policyholder can receive a Among the several factors that affect insurance products who look at insurance reduction in their premium if they the penetration of insurance in Malawi as a form of gambling; others consider it take steps to protect their insured and most developing countries is the lack as legalized theft; others understand it as property against climatic risks of disposable income among the citizenry. a form of tax; while others just don’t trust such as flooding and hail. By the In a country where many people live insurance companies with their hard- same token, a policy holder may below the poverty line, it is difficult and/ earned money. In the case of life insurance, face a higher premium if they or almost impossible for people to think some people still struggle to discuss or choose to develop a project in an about setting aside money in the name of consider their own death whereas others area prone to climatic risks such future security when they are struggling to are uncomfortable with the idea of building as floods and droughts. put food on the table. up funds to be enjoyed by beneficiaries • Insurers can draft their policies Insurance is generally considered a when they are long gone. Further, the to limit their loss in the face of luxury and, therefore, rarely forms part bane of the insurance industry has been its weather-related risks. This can of most households’ budgets. This is the poor image due, in the main, to a negative be done by limiting the scope case in most African countries, including claims payment reputation. No wonder for claims which can be made Malawi, where insurance is seen as a rich insurance is not considered by many and or insured should put in place man’s product. The high cost of insurance is generally last on the shopping list of the measures aimed at protecting premiums does not help matters. With a few that purchase it. property against weather- majority of the populace lacking disposable With the myriad challenges facing related risks are for a claim to be income, it can be argued that the few that the industry, one wonders as to whether successful. can afford insurance products, only small insurance companies will continue to walk In conclusion, the insurance industry amounts of money can be set aside for such the tight rope or turn the challenges into is in greater-or-lesser degree of trouble; and the impact on the insurance industry business opportunities. climatic events in years to come can be anybody’s guess. The above stated misconceptions and will have far reaching effects on the Then there is the assumed complicated worries among insurance customers, point insurance industry. This prospect befalls nature of insurance products, which at an information gap between players in an industry where capital is shrinking coupled with a lack of knowledge and the insurance industry and the community and exposure - even if catastrophe information on insurance matters, affects they ought to serve. Have insurance magnitude were static - is rising. the uptake of insurance products by companies dedicated enough time and consumers, making it hard for the insurance effort to educate the masses about the Let us all be prepared for the effects industry to grow. Until today, Malawi has meaning and importance of insurance? of climate change. potential customers of various Apart from the imperative of improving

10 2016 Issue 1 | Malawi Insurance Times the claims performance of individual members and to regain public confidence, the reputation problem must be tackled at industry level through strategic and intense awareness and branding campaigns to Marjorie create a positive industry image. Ngwenya, the There is, therefore, an urgent need for the first non-British- insurance industry to educate the masses about the discipline. The many questions based person and uncertainties in people’s minds can be to be appointed turned into an opportunity for insurers to sell and grow their portfolio beyond the president-elect of popular motor vehicle insurance which the UK’s Institute has proved unprofitable but remains “well- and Faculty of liked” because it is compulsory. Providers of insurance also need to make Actuaries (IFoA) their products easier to understand and compare, apart from making transaction processes more efficient. Insurers need to work on simplifying the language on their policy documents, most of which are very technical, so that policy holders can easily understand the same. Insurance companies can further translate policy documents in local languages that citizens are comfortable with other than sticking to English in a country where literacy levels are low. Such a move could also help in changing the perception that insurance is only for the rich and educated. Meet the African The public also needs to be enlightened about other equally important insurance covers apart from motor insurance. woman set to head Examples of such insurance covers include but are not limited to fire insurance for buildings, insurance for office equipment, UK actuaries institute travel insurance, burglary insurance, term insurance. Insurers could also explore the possibility Based in South Africa, Johannesburg, Ngwenya is currently the Chief Risk Officer of lowering the cost of premiums, improve for Old Mutual’s African business unit. She took up her position as president-elect in on efficient claims settlement and customer June this year and will accede the role of President in June 2017. service and have country wide presence to Of major significance is the fact that Zimbabwean-born Ngwenya is the first person improve the penetration of insurance in not based in Britain to ever hold the position. Malawi by breaking into underpenetrated Expressing her gratitude over the appointment Marjorie says: markets with new products and tailor- “It’s a real honour to be elected by my fellow Council members to the presidential make the products to suit everyone. team. The profession is continuing to expand its reach across the globe and I am In this era of technology, insurers need proud to be the first iFoA president-elect to be based outside the UK”. to consider the value of digital platform in She has served four years as a member of the IFoA’s Audit and Risk Committee enabling the sharing of information with and is a current member of the Management Board. intermediaries and consumers to enhance As an overseas member of the IFoA Council, Ngwenya represents the Faculty as customer experience and enable self- an ambassador and connects with IFoA’s overseas membership. service features. She served as editor of The Actuary magazine for three years until 2011. She is In the end, a vibrant insurance industry also a trustee of the Legal Resources Trust in South Africa and is expected to bring a can undoubtedly contribute to the growth wealth of experience to her new role. of the economy through taxes and the “I am looking forward to continuing the important work done by those who have protection of businesses and assets. held the role before me and to bringing the benefits of actuarial science to more people around the world. The actuarial profession is continuing to expand into new disciplines and I look forward to contributing to this impressive work to move the profession forward,” she said. This novel appointment is a source of inspiration for Malawians particularly women from all walks of life. To have a woman doing successfully well in actuarial science is incredibly significant. It proves that women can equally excel in the mathematical and scientific studies unlike previously held stereotypes that women are not suited for such kind of disciplines. As a matter of fact, women in Malawi and across Africa are rising up to unexpected heights. Today, they have grown more daring in both the business and academic world. Women have moved beyond cultural limitations, Marjorie is proof of that. It is The author is a Branch Manager for Britam Insurance- Zomba. The views expressed in this article are those of quite interesting that she is an African woman and the first ever to be nominated for the author and do not in any way constitute the views of the position residing outside UK. Britam Insurance or its affiliated companies.

2016 Issue 1 | Malawi Insurance Times 11

Treating Customers Fairly (TCF): a novel way of doing business

By Tawonga Joel Manda BBA, ACII

have been led to expect. changed by the underwriters as far as TCF is 6. Consumers do not face unreasonable concerned. TCF is about post-sale barriers imposed by firms to In dealing with the situation in question, change product, switch provider, submit an underwriter in the first place should be commitment and a claim or make a complaint honest with the customer (minibus owners) 7. In Malawi, unlike in the UK and about their situation (they have a poor effort to ensuring South Africa, TCF is not a regulatory claims experience and pose a high risk to requirement. However, as we are all the insurer’s book of business) and assist a fair deal for aware the world has become a global them with information as well as support customers, balancing village, TCF will sooner than later them in implementing whatever mitigating become a regulatory requirement in defences available in a cost effective way the customer’s needs Malawi. If not a regulatory requirement, to reduce the risk. Provided the risk can be TCF will be a good business practice reduced to a level where it is not probable with the firm’s needs. essential for Malawi businesses to or inevitable but merely a possibility then remain competitive globally. acceptance by incorporation large than usual In 2012, Minibus Owners Association of degree of coinsurance with the customer can Malawi, a grouping which lobbies and be explored. reating Customers Fairly (TCF) advocates on issues affecting owners of What might not be viewed as fair treatment has become a common word in the minibuses with the government and within the principle of Treating Customer United Kingdom (UK). The regulator other stakeholders, threatened to bring to Fairly is for the insurer to decline such a of financial institutions in the UK, the a standstill minibus operations in Malawi. business or offer unaffordable premiums T The association called for a nationwide strike with no any explanation knowing that the Financial Conduct Authority (FCA), imposes a duty on the management of firms operating for its members to protest against the move minibus owners may have difficulty to pay in the UK to ensure that the principles of by domestic insurance companies to hike the premium much worse even be able to treating customers fairly are embedded into minibus third party premiums from K221, obtain the insurance cover anywhere else. the firms’ values, culture and in the way they 000.00 to K490, 000.00. TCF is about commitment and effort to conduct business. This incident provides a classic example ensuring a fair deal for customers, balancing Near to home, TCF is also being advanced on how underwriters can demonstrate TCF the customer’s needs with the firm’s needs. through the Financial Services Board (FSB), as good business practice. This means underwriters should have an the financial regulatory agency, responsible First of all, it is important for a consumer understanding that customer needs are critical for the non-banking financial services of insurance products to understand and in forming customer value proposition. The industry in South Africa. appreciate how premium for a risk is derived promises made to customers and subsequent Financial services firms in the UK and by the underwriters. Insurance premium delivery on those promises should be South Africa regardless of their size need to comprises of three key components; risk, central. Every decision is evaluated from the abide by the TCF regulations and ensure that expense and profit. A prudent underwriter customers’ perspective. they are demonstrating the six outcomes of will always ensure that all these three All policy documents should be reviewed TCF with an aim of raising the standards at components are adequately taken care of for technical correctness and underwriters which firms treat customers in their business. when deriving a premium for a risk. Simply should craft the wording in a plain and simple The FCA and the FSB require that firms put, premium charged for a risk should language. The marketing materials should be operating in UK and South Africa respectively, be enough to cover the cost of claims, the transparent about the charges that apply to demonstrate that they are delivering the expenses incurred by the underwriter and the products, as well as product features following six TCF outcomes: it should give shareholders return on their Intermediaries should be trained on the 1. Consumers can be confident that they investment in form of a profit. specific product features to be able to provide are dealing with firms where the fair From this point of view, it is logical that the appropriate information to customers. treatment of customers is central to the when claims cost increases, premium charged Customers should be provided with access corporate culture. on a risk should increase simultaneously. to the necessary information (more detail on 2. Products and services marketed and Technically, underwriters in 2012 were the information provided at point of sale, sold in the retail market are designed to justified to increase the premium for the on an on-going basis up to the end/expiry/ meet the needs of identified consumer third party minibus cover because the claim maturity of the policy) groups and are targeted accordingly. experience levels for third party minibus had Finally, underwriters should ensure that 3. Consumers are provided with clear increased significantly. Providing cover at the claims are paid and customers are accorded information and are kept appropriately then prevailing premiums rates would have an opportunity to claim and make complaints informed before, during and after the been unsustainable from the underwriters’ on products and/or services that are not point of sale. point of view. meeting their expectations. 4. Where consumers receive advice, the Nevertheless, Outcome Number One on advice is suitable and takes account of TCF principles state that “consumers should their circumstances. be confident that they are dealing with 5. Consumers are provided with products firms where the fair treatment of customers that perform as firms have led them to is central to the corporate culture”. The threat of a nationwide strike by the minibus The author is currently working as a Client Services expect, and the associated service is both Manager for Old Mutual (Malawi). He writes in his of an acceptable standard and as they owners was a clear demonstration that the personal capacity. minibus owners felt that they had been short-

2016 Issue 1 | Malawi Insurance Times 13

Money management lessons from the jungle

By Benson Chirwa BBA, MBA

anaging money is a skill on create a financial plan so that you always threaten your financial security, loans can its own, which unfortunately keep an eye on your goals. Create short- be excessive and one needs to take charge is rarely taught in school. term financial goals (1- 2years), for instance, by reducing his/her debt. One needs to MWe only learn the money purchase household items, medium term charge down debt like the rhino, borrow skills mainly from our parents and other goals(3- 5 years) e.g. buy car, pay for money responsibly, and repay high interest channels. education, start and grow own business loans faster than low interest loans. Experts There are certain animals in the jungle and long term goals(5 or more years) e.g. advise that your monthly loan repayments that have certain behaviors from which build a house, retirement plan etc. should not exceed 36% of your monthly one can learn and adapt for use in day to Plan like a leopard, create a financial income. day money decisions. These animals are vision, and write down the financial goals the Lion, Leopard, Rhino, Elephant and and step by step action plan on how you Buffalo. can achieve those goals. This article takes a look at each of the animals and see how they relate to our day to day money management decisions.

The Buffalo The mighty buffalo steadily grows its herd, and diligently protects all the members of The Elephant its family by finding strength in numbers. Elephants are known to have a great memory and are careful to make visual Lesson: Buffalos can inspire us in two The Lion notes of food sources along their migration ways, to protect and grow our assets. The male lion eats first before the rest of paths. We protect our assets by making sure we the family; it does this so it can be sure of insure them e.g. Household items against having the strength it needs to protect its Lesson: The ultimate question is ”how fire, theft and robbery which are rampant family from any danger. much do you have left after expenses each nowadays. We can also insure ourselves month which you can use either to save, by getting life insurance and disability Lesson: Take a portion of what you earn pay debt or invest”? Learn how much covers. This ensures that our loved ones every month (at least 10%) and this can be you earn per month, know what you owe, do not have to struggle financially in case eased by setting a monthly debit order for track down your expenses; create a budget something happens to us. a savings plan. Pay yourself first like the monthly and annually and stick to the We grow our assets by making it a lion, create the habit of saving; you can budgets to ensure you live within your habit to invest a portion of our income in start with a small amount but grow it as means. high interest bearing investments e.g. unit time passes. trusts, stock exchange, treasury bills, fixed deposits etc. As much as you can, ensure to take on investments whose rate of return beat inflation so that we do not lose out our investments to inflation. When we invest, compound interest works best for us, when we borrow compound interest works for the lender. The more we invest the more wealth we create. There is a saying that the best time The Rhino to plant a tree was twenty years ago, the The Rhino has the habit of charging next best time is now. So it’s never too The Leopard straight to a predator when it is threatened, late to start adapting lessons from the five Leopards climb on a tree or hill from where she charges down the predator to protect animals. they plan their day and decide which herself as well as her siblings. animal to target for their meal. These lessons are adapted from an Old Mutual Lesson: It’s the same with your money, Financial Education program called “On the Lesson: You can learn from the leopard to if you borrow too much money this can Money”.

Part of the audience at the OESAI Networking Dinner held at Protea Ryalls Hotel on 21st March 2016.

Let me reiterate the importance of the Organisation of Eastern and Southern Africa Insurers as a source of collaboration for ideas, sharing of knowledge and exchange of experiences for the continuous development and improvement of the domestic insurance industries in the respective member countries.

By Chimwemwe W. Kanyenda

he Insurance Market in Malawi members with regards to underwriting hosted the Organisation of Eastern practices, facilitating the exchange of Secretary General of OESAI, Mrs Eunice Ndathi and Southern Africa Insurers insurance and reinsurance between addressing the audience at the dinner. T(hereinafter OESAI) Management members as well as playing an active role Board in Blantyre from 19th to 22nd March in complimenting efforts of COMESA and it actually comprises 54 separate sovereign 2016. The landmark stature of this year’s SADC to engender economic cooperation. states. Any regional or pan African OESAI board meeting was underscored by Let me reiterate the importance of the integration is premised on and can only the fact of its maiden nature. This was the Organisation of Eastern and Southern succeed if states voluntarily give up certain first and hopefully not the last occasion for Africa Insurers as a source of collaboration sovereign powers and Governments and the Board to meet in Malawi. for ideas, sharing of knowledge and regulators fully cooperate to optimise the OESAI was formed in 1973 as a result of exchange of experiences for the continuous cross border movement of goods, services the initiative of eight insurance companies development and improvement of the and people. A related consideration in the Eastern and Southern Africa region. domestic insurance industries in the is whether African states are natural Over the years the membership has respective member countries. collaborators or actual or potential grown to 113 members at present and the Efforts at regional and sub-regional competitors for foreign investment. The membership continues to grow steadily. integration in Africa go back to the general consensus is that integration Membership of OESAI is open to all immediate post-colonial period. It was seen and cooperation is vital for African insurance and reinsurance firms, insurance as an extension of the liberation movements development, as most African countries broking firms, and organizations engaged and an effort to construct geographic have relatively small internal markets in insurance activities operating within the entities that were economically viable and can develop greater economies of member countries and across Africa. and politically united. It also reflected the scale through regional integration to The organization has actively worked prevailing European experience with its become more competitive and attractive on promoting best practices in insurance emphasis on free trade within a common to investors and promote intra African business by supporting research initiatives regional market. trade. Many African borders are artificial and innovation in products and services, Africa is often spoken about as if it is colonial creations which cut through and advocating the exchange of ideas between one country or unified bloc, even though separated pre-existing economic regions.

20 2016 Issue 1 | Malawi Insurance Times Intra African trade still only makes up approximately 10% of Africa’s total trade (compared to approximately 60% in Europe, 40% in North America and 30% in Asia) although informal trade levels are not covered in official statistics and may increase the overall figure. A framework for regional integration already exists in the form of established regional bodies like the Southern African Development Community (SADC), the Southern African Customs Union (SACU), the Economic Community of West African States (ECOWAS), the East African Juan Mata’s Manchester Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). The planned Cape to Cairo United Induction Experience free trade area (including SADC, COMESA and EAC) would integrate twenty-six A strong employee engagement strategy can help drive outstanding countries and 590 million people and there performance for organizations - and that engagement starts the minute an is talk of a single currency. Key challenges employee joins the organization. Two years into his career with Manchester remain the political will to integrate and focusing on the detail and implementation. United, Juan Mata talks about his onboarding experience. This include the removal of tariff and non-tariff barriers and restrictions on the pon joining Manchester United, history of the club, before stepping out onto availability of trade finance; fast tracking all new players and employees are the pitch in the empty stadium to marvel at cross-border infrastructure; single border given an introduction into life at his magnificent new home. For Mata, the posts; limiting red tape, reducing costs UOld Trafford, including a guided onboarding process at Old Trafford helped and formalities for cross-border transport tour of the Reds’ iconic stadium and club him feel part of the club from the very (including improving flight connections museum. While some new squad members beginning: between African countries and removing may have experienced Old Trafford as “I like to visit the Museum – for me it’s visa requirements) and supporting and an opposition player, it’s only when they nice to know the trophies, the history, integrating the informal sector into the become a Red that they truly understand every important player of the club,” said formal economy. what Manchester United represents and the Mata, reflecting on the experience. “When The East African Community (Kenya, impact this unique organization has on the you arrive at a new club you should know Uganda, Tanzania, Rwanda and Burundi) club’s 659 million followers worldwide. the history and what it means to play for is a useful model for other regional Whether on the pitch or in the boardroom, this specific club. I feel that I need to know integration projects and includes an a structured and comprehensive induction what happened in United’s history over East African Court of Justice and an East process helps generate engagement from the years and what happened with every African Legislative Assembly. A customs the very moment a new team member trophy – what happened with every legend union was established in 2005 and a walks through the door. Recent Aon – everything about the club.” common market in 2010. The next phase Hewitt research shows that a strong History and pedigree are important of integration is to enter into a monetary employee engagement strategy helps drive organizational factors in attracting, retaining union (negotiations have commenced) and outstanding performance for companies and engaging top talent.. When asked about ultimately a political federation of East and that engagement starts the minute an the impact of the tour, Mata emphasized the African states is envisaged. employee joins the organization. importance he places on the club’s heritage All in all, the promise that integration With the arrival of the 2014 January of success and performance: holds, in the form of the enlargement of transfer window, Manchester United could “I knew that this was the most awarded local markets, the realization of economies see the addition of world-class talent at Old club in England – and it’s amazing to see of scale and the strengthening of Trafford, but what can the new signings in person how many trophies Manchester bargaining positions in global negotiations expect when they arrive? Two years on United has won,” Mata continued. “Winning is a sufficient allure to make the countries from his move to Manchester United from 20 English Leagues, three champions of of Africa endeavor continuously to forge Chelsea, we take a look at Juan Mata’s Europe as well, more than 10 FA Cups – these regional trade ties experience joining the club and how it’s amazing the amount of trophies this The prospects for a deep and integrated the onboarding process at Old Trafford club has won during its history, from the market in insurance in Eastern and impacted him. early ages through to when the club last Southern Africa are considerable. The After joining United in January 2014, won the Premier League. From the outside, challenge for both OESAI policy makers Mata was keen to learn all about the you can see how big the club is, but when and insurance firms over the years ahead history of his new club to fully appreciate you’re inside you realize how big it really lies in sustaining the momentum behind the heritage of which he had become a is. You can see from the trophies alone, the strong national and regional markets in part. Mata wanted to understand what the importance this club has in the world.” insurance to support economic growth and supporters feel for the club, be in tune with Organizations with a strong heritage socio-economic policy goals. the songs sung about legendary manager of success can draw upon this sense of Sir Matt Busby and the club’s 20 English tradition to engender a sense of long-term League titles and, ultimately, feel the commitment among new employees. By honour of wearing the Manchester United showing new employees the history and shirt. successes of the organization from the very Soon after his arrival, he met up with start of their journey with that company, The author is currently working as Assistant Claims MUTV presenter David Stowell and businesses can communicate their core Manager at NICO General Insurance Company Limited. United legend Paddy Crerand to take part values, beliefs and approach early on and He writes in his personal capacity. He is also a columnist (Insurance Insight)with the Daily Times. He has recently in the stadium and museum tour. Guided build a workforce that is excited about published a book titled “Random Thoughts on Insurance by his hosts, Mata walked the corridors the future and ready to create the next big Practice and rooms of the museum, soaking in the milestones. www.aon.com

2016 Issue 1 | Malawi Insurance Times 21 The eye of a storm reveals your strength

By Lester Tiziti Chinyang’anya BSoc (Econs), FCII, MBA

t is a paradox. Adversity begets success. not allow setbacks to destroy you. Setbacks Looking back at the after-effect of the make us strong. Get good from bad. Do Great Depression of 1930s, it would you see lemonade from lemon? “If you Ibe understandable to state that the The height of confront your problems rather than avoid financial crunch was a blessing in disguise them, you will be in a better position to for some people. More entrepreneurs a building is deal with them,” observed His Holiness committed suicide than Ebola killed people The Dalai Lama. in West Africa in 2015. Some business men determined by As you journey through life, not all succumbed to the depression’s effects, situations will be positive. Life is full of ups whereas others were made stronger by the the depth of and downs. Problems and successes switch same crisis. with each other in the same way seasons Manhattan tycoon and Republican its foundation. change from winter to spring to summer presidential aspirant, Donald Trump, to autumn and back to winter, et cetera. attributes his success in real property to The deeper the Each of these seasons occur depending on ‘sweet’ lessons he etched from the financial foundation, the the Earth’s position on its orbit. You may crisis. The success story of KFC points its not like all the four seasons, so you need origin, too, to the tough economic times of higher the building. to develop thick skin to adapt to change the depression. of the seasons, lest you die, spiritually and The statement that adversity begets physically. Just like ants gather booty in success is grounded in ‘strong foundation’ harvesting time in readiness for winter, you, guiding principle. too, need to get in the habit of steadying up The Bible tells us about two houses that yourself for difficult situations. Adversity were built on different grounds, sand and word of God in the Mediterranean Sea area is seasonal. It comes and go. It alternates stone. The houses were hit by storm and and beyond. He fixed his eyes more on the with success. ended up in different forms. One house trophy than on circumstances. He was a You do not have to be offended, upset stood firm while the other was reduced winner. or get frustrated with how your manager to a heap of useless rubbles. Luke chapter The height of a building is determined overlooks you on promotion at work 6: 48 delivers the point home; “He is like by the depth of its foundation. The deeper despite your hard work; that your spouse a man building a house, who dug and the foundation, the higher the building. left matrimonial house; that your medical went deep and laid a foundation on a If you want to go up your career ladder, report is discouraging. If you think you rock. When a flood arose, the stream broke you need to take deliberate actions to have problems, I invite you go to Queen against that house and could not shake strengthen your foundation. How deep is Elizabeth Central Hospital or Kamuzu it because it was founded on the rock. your foundation? Are you keen to learn the Central Hospital, this weekend and see The resulting verse 49 compares with the basics of your profession, do belly-to-belly people with real problems. What does a preceding verse as follows; “… like a man marketing and build relationships? Do fish know about the water within which that without a foundation, built a house you associate with people who champion it swims? Do not give up on pursuits. Fix upon earth, against which the stream did greatness or mediocrity? Do you take time your eyes on the trophy. Fight on, the strife beat vehemently, and immediately it fell; to read deep motivational books? The more is seasonal. Behind every strife there is and the ruin of that house was great.” you read and learn about areas which cause greatness. Life is 10 percent what happens History is replete with accounts of you to be fearful, the stronger you become. to you and 90 percent how you respond. companies and individuals that went Do you have a couch or mentor to take you Face the challenge with hope. God’s favour through crises, lost billions of dollars, through the ropes? Do you take time for will come knocking on your door. possessions and loved ones, but rose again, yourself to answer the three questions that on’t you prepare for change of made their brand and name greater than matter in life: Who are you, why are you seasons by buying umbrella previously. The Bible has good lessons. Job here and where are you going? for rainy season, warm clothes lost his ten children in a day. His health Most of us give up too easily on pursuits. Dfor winter and light clothes for deteriorated day after another. Moses Few of us possess resilience as that of summer? You need to prepare yourself for grew up in a harsh environment. He was Nelson Mandela. We learn from Mandela life’s setbacks in the same way you prepare a murderer and sought refuge in a foreign that greatness supersedes adversity. We for change of seasons. Dig your foundation country. Paul, great author of his time, who are assured that no matter how tough the deep. wrote more books in New Testament than environment may be, greatness beckons. Avoid complaining every time things any other writer, did not find it easy in Learning about Mandela, Mahatma do not fall on your side. For some people, his crusade to spread the gospel. He went Gandhi, Ben Franklin, Hellen Keller, Victor complaining is a way of living. They through adversity; he was jailed several Frankl et al, we are drawn to appreciate that complain about the weather, changing times, his ships capsized, he was stoned. we are not the first and not the last to have economy, increased competition, dogs The list is long. He never gave up on his faced hardship in life. Greatness comes by barking at night, managers at work and goal to evangelize and spread the being great in word, deed and being. Do spouse at home. They always find an

22 2016 Issue 1 | Malawi Insurance Times excuse to complain about something. Be of the best are not afraid of failure. Like in companies that have, at least, tasted a positive person. Be the first to commend in photography, pictures develop from failure? Run toward challenges. Embrace your workmate for releasing management negatives. and befriend them. In my life I have accounts on time. Compliment your wife Allowing people to play depressing learned that what we befriend transcends, for new hair-do. Go out and encourage mental videos in your being, will not but what we resist persists. A boat that subordinates to work hard. Be the first help but make setbacks to crash you. If stays in the safe harbor is never banged up person to extend a hand and greet someone you allow circumstances to control you, by rough seas, but that’s not what boats in the elevator or commuter train or there will always be some reason to be are made for. America would not have minibus as you go to office. Be the person, discouraged about. Learn lessons from been discovered if Christopher Columbus who always wears impeccable smile on the great leaders, living and dead. Quit giving did not leave sight of the land. Columbus face. Cynicism is retrogressive. Life favors away power. Whatever happens in life, challenged himself by venturing into the those, who experience the most. happens for a reason. Things happen the unknown. What did he get at the end of When you complain about someone, way they happen to teach you the lesson the day? He discovered America! He was you, in essence, are assigning your power that you need at that particular time. One a winner. to that person. All you are saying is that of my favorite quote is by Pema Chodron, To build strong foundation you must for you to change or be happy, the other who wittily said; ‘nothing ever goes away consolidate confidence in ‘your person’ and person must first change. That is an until it has taught us what we need to not position or title. A good friend of mine, incompetent way of living. Debilitating. know.” Powerful point. who lectures at one of the universities in Change must start with the person you the city I live, does not answer to his name look at in the mirror every morning. Life is unless you call him Dr X. too short to be offended every time things You may be telling yourself, “I cannot do not work. make it in life because I am not educated, andela once said; “do not judge Allowing people to I am not a manager at the office, I do not me by my successes, judge me have money and my family background by how many times I fall down play depressing is murky.” I tell you today, true power or Mand got back up again.” mental videos in resilience does not need titles or riches or Of all world leaders’ biographies that I beauty to reign. Mahatma Gandhi fought have read, Nelson Mandela’s is the only your being, will colonialists as a pauper in loin clothes and one, which virtually every time I read it, tin glasses. He never held political position prompts an accelerated heart rate and not help but make in any party but people rallied behind a hair on the back of my neck to stand setbacks to crash him. He changed the political landscape attention. The man, Mandela, had charm, of India. When people see how strong grace, humor, humility and hope, despite you. If you allow your vision is, they will go all the way to the setbacks he endured in his 27 years of circumstances to achieve that vision with you irrespective incarceration in prison. Here is a man, who of setbacks. If your power comes from the used his several trials and setbacks as a control you, there position you hold at your work place and platform to express himself and publicize will always be not ‘your person,’ then the day that office his goal at a time when newspapers, is not there, you are finished. television, radios were virtually barred some reason to be Build confidence in yourself. God, your from broadcasting his speeches, let creator, put some arsenal in you to help alone print his articles. He turned his discouraged about. you overcome adversity and realize your confinement in prison into an opportunity dreams. Have something in the future to to free himself and unite the apartheid- look forward to. Do you have a vision you ravaged nation into a non-violent state. are ready to die for, even at gun point? At Robben Island, where Mandela was How deep is your foundation? Will you When you wake up in the morning, light imprisoned, inmates were treated harshly. withstand the storm of adversity when it fire in your belly. Propel yourself into the They were given ‘phala la ufa wa mgaiwa’ strikes? As I alluded to earlier, if you are not world. As Martin Luther King Junior sagely (maize flour porridge) in the morning facing setbacks in your workplace, family, said; “If you have not found something you and evening for breakfast and supper, school, anywhere, then, you are playing are prepared to die for, then you are not respectively. Prisoners washed themselves small with your life. If you are not failing, fit to live.” Be ashamed of yourself if you in salty ocean water. They were forced at least, once in a week, you are playing do not have a strong vision you are ready to work long hours in the sun, breaking small with your life. You were created to to face death for. What are your goals for lime quarry with blunt tools. Despite all reign, overcome problems and win. 2016? What do you plan to achieve in five these setbacks, Mandela never gave up on According to Gallup research, “the years’ time? How do you see yourself in his goal, rather he got up, dusted himself human brain creates novelty.” We grow 2020? As you lie on your deathbed, what off and stepped-up the stair. When an when our backs are up on the wall. Papa will fill your heart with greatest regret will opportunity availed itself, Mandela made Wallenda, the famed tight-wire walker, not be all the risks you have taken. What use of his resilience gained in prison and said it so splendidly; “Life is lived on the will fill you with greatest sadness in your legal skills to fight for himself, fellow wire, the rest is just waiting.” We make final moments will be all the risks you did inmates and the oppressed. He was a achievements, when we see the eye of not take, all the opportunities you did not winner. the storm. The founder of Aon Insurance seize and all the things you did not do. You may not see victory today, tomorrow Brokers, W. Clement Stone set up Aon we he other point to consider in or the day after tomorrow or next year, but know today amidst struggles. He sold life building strong foundation to verily as time passes you become stronger, insurance from door to door in a briefcase. overcome setbacks is avoid taking equipped with lessons. The sages from the People, who have gone through setbacks Tshort-cuts. Avoid cutting corners East said it so well, “diamond gets formed persistently are able to handle situations, as you discharge your duty or work to under intense pressure.” If you are not sail through life and prosper more than achieve your goal. If you compromise on having setbacks in your life, sorry, you those who have never tasted defeat. Is this are playing small with your life. The best not the reason Warren Buffet only invests To page 24

2016 Issue 1 | Malawi Insurance Times 23 From page 23 Bancassurance: Bridging the small things, you are verily setting yourself up for compromising in big things. You cultural divide have heard before that practice makes perfect. Avoid micro-wave mentality. between Banks Chisomo Chilunga Chibwana Focus on your goal, no matter how long BBA; Adv Dip-ABE; Cert CII it takes to achieve it. It took more than 30 years for Mandela to realize his goal. and Insurers Repeat 30 years. Success is achieved by incremental, not uber quantum steps. Fix business your course to a star and you will navigate any storm. I know someone, who took 12 years to qualify as Associate of The Chartered Insurance Institute (ACII). The point is that this friend of mine never The concept of insurance policies being sold scattered his mind in different directions. He had eyes fixed on the trophy. He was through banks is called ‘bancassurance’ and a winner. Confucius ingeniously said; “he who chases two rabbits catches none.” there is a lot of interest in this distribution channel As a point of departure, I must warn you. from all the stakeholders - customers, banks, It is great to run toward places that scare you, but do not underestimate problems. insurance companies and the regulator. Whenever you encounter a problem or setback, do not push it under a mat. You need to acknowledge its existence. Devise strategies to overcome it. Problems are like pregnancy. They grow until their presence here have been notable and designed to assist customers to obtain bank is obvious. Problems cannot be concealed significant developments in facilities inclusive of insurance offerings but fortunately they can be overcome. the economy which have seen under one stop shop hence the insured Adopt the ability to cope with bad Tpartnerships between banks and benefits from the convenience of being able situations of life. Build faith that can move several service providers’ for instance, to obtain banking and insurance services a mountain. You were born a winner. mobile phone operators, insurance from one source, in a market where there Winners never give up. They embrace companies, micro-finance companies, are few established means of insurance pressure, be it at home, workplace, church, auto-mobile institutions just to mention distribution. political party, school, any other place. a few, in order for both parties to remain The major facility provided for under the What lies within you is by far mightier than competitive and relevant on the market. bancassurance arrangement partnership what lies in front of you. As the bestseller The insurance companies are also aggressive is Credit Life Cover. In this regard the Robert Schuller candidly observed; ‘tough in finding alternative distribution channels bank requires security for its “big” loans times never last, but tough people do.” The for positioning their innovative products in event of default, death or loss of job/ secret of success is to find a cause bigger through banks hence the formulation of business income. than your persona, maximize your potential partnerships. to achieve it irrespective of circumstance The concept of insurance policies Banks therefore grant the facility under the and sow seeds for other people. Do not being sold through banks is called following major conditions:- fall asleep at the wheel of your own life. ‘bancassurance’ and there is a lot of interest • Customers should have regular Setbacks bring growth. Growth brings in this distribution channel from all the income from business enterprise / awareness. Awareness brings clarity. stakeholders - customers, banks, insurance employment or approved bank’s Clarity brings success. Remember: we all companies and the regulator. conditions. grow by visiting places that scare us and Bancassurance, as a financial facility, • Customers will have to qualify for the facing circumstances that challenge us. was first practiced in France in the 1980s. Bank’s lending products. Truly said; the eye of a storm reveals your In most bancassurance cases, the bank will • strength. This is legendary. sell insurance that are underwritten by an The customer will borrow for the insurance insurance company. Ideally, bancassurance premium as well as for the loan under the tries to exploit synergies between banks respective product programmes as long as and insurance companies. A commercial the customer qualifies. bank undertakes insurance business as a tied corporate agent of a particular The Credit Life arrangement normally insurance company. This is usually on a applies to the following products:- commission basis. 1. Consumer Loans The bank enhances its client’s footprint 2. Mortgage Loans and service satisfaction to its clients’ base 3. Vehicles Loans while the insurance companies expand 4. Asset Finance The author is a Fellow of The Chartered Insurance Institute their business cheaply and effectively, by of London (FCII) and Leadership & Self Help Enthusiast. He works with Sanlam General Insurance (Tanzania) drawing on a bank’s existing customer Limited as Chief Operating Officer. He has published base. more than 1,200 articles in local and international To page 26 publications. He writes in his personal capacity. Bancassurance arrangement has been

24 2016 Issue 1 | Malawi Insurance Times

From page 24 The benefits of the partnership to the your business. In the event that you, Insurer are:- your business partners or any keyperson • Insurers are able to expand their are unable to work, your business will business cheaply and effectively, by continue to prosper. drawing on a bank’s existing customer You’ve worked hard all your life to The benefits of the partnership to the base. build up your business. You’ve poured Bank are: • Insurers take advantage of banks well your heart and soul into it and risked a • It provides Credit Protection if the established distribution network. lot to get it going i.e. challenging clients, borrower dies. • It helps to grow the Insurers brand. restrictive budgets and looming deadlines. • It adds value to the banks servicing It’s all come together finally and now that channels. Types of Bancassurance Products your business is a success, its most valuable • Widening Non-Interest Revenue base asset, its people, need to be protected through commission. • Short term against the unexpected. • Provides innovative product offering. Insurance for property, for instance, Unfortunately, when the unexpected vehicles, mortgages, machinery amongst happens we need to plan accordingly. The benefits of the partnership to the others is covered by the general insurer for What would happen to your business if customer are:- the loss of the asset. you or your business partner were unable • The loan will be repaid in full in the to work, or if one of you dies? Talk to your event of death or total disability. • Long term banker for Keyman Insurance. • Enhanced Bank’s reputation instead Credit Life insurance to protect the Banks You’ve worked tirelessly for several of repossessing the house or other Financial interest on the loan in the event of years and eventually you have managed to assets from the deceased family. the death or total and permanent disability secure a House Loan with a bank. In the • Bank is deemed to be a caring of the borrower. event of death, how would your family institution above business goal since cope financially if that house you bought the loan is re-paid by the insurance Benefits under Death Cover through a bank loan is not fully repaid? company. Each life assured shall be covered for an Talk to your banker for Life Protection and • The customer will not go through the amount equal to the outstanding loan Asset Protection cover. hassles of dealing directly with the amount, or such other amount as may be Given that bancassurance is successful insurance company and insurance agreed between the assurer and the Bank in a number of countries around the world costs are low. from time to time. including South Africa it is not surprising • The customer will enjoy a higher that many banks in sub-Saharan Africa are free medical cover under this Benefits under Total and Permanent seeking to grow the revenues that they arrangement. Disability. generate from insurance. It is therefore • The Bank will pay the annual The benefit is payable if the insured is crucial for interested banks and insurers premium to the insurer on-behalf of totally & permanently disabled by injury, to understand the structure and regulatory the customer and grant a loan to the surgical operation or disease and the environment of the Malawian market in customer that will be repaid within disability has to be certified by a medical order not to miss out on the great potential 12 months for Mortgage and Vehicle doctor. of bancassurance in the country. &Asset Finance. Funeral Insurance of which benefit • The Bank will pay monthly premium consists of small fixed monetary insured or for the entire term of the Loan in amounts, which apply to all Primary respect of Consumer Loans and Grant Insured Persons and Insured Persons in Loan to the Customer that will be the group, subject to maximum benefits set repaid over the term of the loan. by the policy holder. • Insurance claims will be processed Keyman Insurance for Business provides faster than it would take if the life and disability risk. The Keyman for The author is currently working as a Bancassurance Manager at Old Mutual Life Assurance Company Malawi customer was dealing with the insurer Business offers comprehensive long- Limited. She writes in her personal capacity. directly. term risk cover solutions to you and

26 2016 Issue 1 | Malawi Insurance Times

Interview with Insurance Veteran, Felix Mlusu, Former Managing Director, NICO Holdings Ltd

After 41 years of dedicated and distinguished service, Felix Mlusu retired as Managing Director of the Malawi Stock Exchange listed conglomerate, NICO Holdings Ltd. Felix Mlusu shares with Chimwemwe Kanyenda of the Malawi Insurance Times about his career.

Tell me about your educational and professional background. I have a Diploma in Business Studies from the University of Malawi’s Polytechnic and I am a Chartered Insurer of the Chartered Insurance Institute of London.

What led you to a career in insurance? It was more of an accident than a desire because at the time I was finishing college, insurance was not very well known locally as an attractive profession because there were not many Malawians in the profession. Felix Mlusu sharing a moment with James Naphambo (C) and Simon Itaye (R) at his farewell function. However, fortuitously, I managed to get two job offers in insurance one with an insurer the then National Insurance Company and, the other with an insurance broker, Ernest Notcutt which later became Clarkson Notcutt. The third job offer was with Malawi Railways. I chose National Insurance Company because it had good Felix Mlusu staff development policy

What events can you describe as many countries. milestones in your insurance practice? You’ve been with NICO for 41 years. Many, but to mention a few, as Chairman What drew you in and kept you at NICO? of the Insurance Institute of Malawi, I Size matters and, NICO was and still is introduced the Annual Induction Dinner. the only company where one can have Further, I introduced an Annual Essay a fulfilling and rewarding career both in Competition with an aim of encouraging terms of personal growth, development insurance research and to deepen and professionalism. In addition to these professionalism. Sadly, the competition factors, I stayed at NICO because of the was discontinued in later years. I also conducive working environment and the served as a board member of the African many opportunities it offers. Mlusu giving farewell speech. Insurance Organisation (AIO) for three years. As Chairman of the Preferential Forty-one years is a long time. Do you Trade Agreement (PTA), now COMESA think you’re going to have a hard time Is there anything you’ve wanted to Yellow Card Council of Bureaux for one letting go? accomplish that you just feel like you year, I oversaw the formulation of the No, because I prepared for my departure haven’t had the time to do? Yellow Card operating protocols. I also where I was slowly easing out and letting Yes, I always wanted NICO to have its own represented the insurance industry in my successor and other senior colleagues training academy for all those wanting to international insurance conferences in take on more and more responsibilities. further their professional careers. I hope one day it will happen. Mlusu, son and wife pose What will be the biggest challenge for together at the farewell the company going forward? ceremony. The biggest challenge will be to maintain the levels of business growth it has achieved in the past due to tough economic environment and competitor activities. The market itself will also be facing sluggish growth thereby affecting the players.

How do you think Vizenge’s tenure will differ from your own, both in terms of his leadership style and also the external factors he might face? For a start we are different individuals with different leadership styles and, therefore we cannot make a like to like

28 2016 Issue 1 | Malawi Insurance Times comparison. Each one of us should be taken as we are, understand our Interview leadership style and accepted as such. The external factors are also different because of different time periods and none of the with Vizenge Matumika periods was or will be easy. Each has its own challenges requiring solutions Kumwenda, Nico Holdings relevant and appropriate for the period. However, having worked with Vizenge for twenty years, I have no doubt that he Managing Director will rise to the challenges with courage and determination.

As an insurance veteran in this market, how do you compare the old and modern insurance regimes and practices? In November 2015, The old and modern insurance regimes NICO Holdings and practices are obviously different because of the time period and to a large announced extent, technology. In the old times, most that Vizenge if not all of document processes were done manually. Companies had typing Kumwenda has pools where manually drafted insurance been appointed as policies, endorsements, memos, letters, etc were being typed by an army of copy Managing Director typists. The turnaround time for anything of NICO Holdings to be done was obviously longer than in present times where “modern” technology succeeding Felix has taken over most of those functions. In fact in the present times any company Mlusu. Malawi which has or does not embrace technology Insurance Times in its operations and product will not compete in the market place. Technology is talks exclusively to the future of business. Viz. Here are the

We all have people that we admire, either excerpts: in our profession, or otherwise. Who would that person be for you and why? The person I admired and who inspired me was Wyndham Freyer former Chief Executive Officer of the then Press Holdings Limited (now Press Corporation). He was a creator and builder of businesses. MARITAL STATUS: Married with three children aged 23, 21 and 13

Any future plans you can share? EDUCATIONAL AND PROFESSIONAL BACKGROUND For now resting and figuring out what should keep me busy with different focus. PROFESSIONAL QUALIFICATIONS • FCCA – January 2000; How do you spend your spare time? • Associateship - January 1995; Graduated June 1990 With family and friends. The grandchildren • Associate of Chartered Insurance Institute (UK), keep me busy when I am not playing golf. • Chartered Insurance Practitioner (UK)

Any last words you may want to share ACADEMIC QUALIFICATIONS with our readers? Insurance is a complex and challenging • MSC (Finance) University of Strathclyde, Glasgow Scotland, November 1987 profession requiring patience and • B.Com Accountancy with credit – University of Malawi June 1985 perseverance. To make a successful career one has go through the insurance training OTHER MERIT ACADEMIC AWARDS mill. There are no short cuts to learning the profession and understanding the • National Bank of Malawi, Faculty of Commerce Best Student Award 1984 trade. It requires determination and • Mobil Oil Best Student Award 1983 commitment if one has to make the grade. I would therefore urge all those interested CAREER HIGHLIGHTS in the profession to think carefully before plunging into it otherwise they will be June 1985 to September 1985: Audit Assistant - Deloitte and Touche disappointed with themselves with this September 1985 to March 1990: Lecturer - Malawi College of Accountancy good profession. Good luck. April 1990 to November 1990: Management Development Consultant-Malawi Institute of Management 10th November 1990 to 30th November 1994: Chief Accountant -National Insurance Company Limited (Now NICO Holdings Limited)

2016 Issue 1 | Malawi Insurance Times 29 1 December 1994 to 31 December 2000: Assistant General Manager (Finance) teams and deliver the expected results, National Insurance Company Limited (Now NICO Holdings Limited) these CEO’s will lead by example while 1 January 2001 to 30 June 2001: General Manager - Finance embracing sound governance structures. National Insurance Company Ltd (Now NICO Holdings Limited) 1 July 2001 to 31 March 2003: Head of Corporate Services (Continental Discount House Ltd) 5. What are the opportunities for 1st April 2003 to 31st December 2004: General Manager and Director the financial sector in terms of CDH Asset Management Limited sustainable equitable growth? 10th January 2005 to 31st December 2011: Finance Director, NICO Holdings Limited Considering the masses that are still not 1st January 2012 to 31st December 2015: Deputy Managing Director, NICO Holdings in the financial services “net”, pursuing Limited “financial inclusion agenda” can present 1st January 2016 to Present: Managing Director, NICO Holdings Limited entities with sustainable equitable growth opportunities. Other Positions - • Director - Pride Malawi 2003 to 31 December 2004- a Microfinance Finance 6. What has the financial services sector Institution learned about its role in society, and • Director - Admarc Investments – 2002 to 31 March 2004 a Government Investment what does it need to do? Finance Institution Lessons include, “success in terms of • Director and Treasurer - Investments Alliance Limited - a Private Investments profitability of the sector is not enough” It Holding Company whose membership is composed of a cross section of high net is expected to play a key role in “detecting worth Professional Indigenous Malawians employed in Executive Management and containing” undesirable elements positions both in public and private sector so that they do not take advantage of • Director - Millennium Investments Holdings Limited - A management buy in infrastructure of the sector to advance company that holds 11.7% of Nico Holdings their anti-social agendas. The sector is • Executive Member and Treasurer of MTL Wanderers Football Club- one of two top expected to invest in systems that will football clubs in Malawi (2006 to 2007). help it discharge its responsibilities in this regard. • Chairman – Chichiri Shopping Centre • Chairman – Lilongwe City Mall 7. What can the financial services • Chairman – NICO Properties Limited sector learn from other industries • Chairman – NICO Asset Managers Limited about stakeholder engagement? • Chairman – Kang’ombe Investments Limited Financial services are part of fabric of • Chairman – NICO Life Insurance Company Limited modern life. In Malawi, the sector will • Chairman – NICO General Insurance Company Limited benefit greatly by conducting civic • Chairman – NBS Bank Limited education and financial services awareness • Chairman – NICO Insurance Zambia Limited campaigns on a scale like is done by • Chairman – NICO Technologies Limited the “Health Sector” primary health care • Director – Sanlam Mozambique Vida awareness campaigns. • Director – Sanlam General Insurance Tanzania Limited • Director – Sanlam General Insurance Uganda Limited 8. What do you see as the greatest challenge for Malawian companies in the economic situation that we are in? 2. Why did you decide to study for its stakeholders all the time. To our clients To maintain current levels of performance insurance? for example - current and prospective – I while waiting for the business environment I was first recruited as Chief Accountant want NICO to offer services that provide to improve and stabilize. for NICO when it was a composite world class solutions to their financial insurance company. I was responsible services challenges at affordable prices 9. Who is your role model in life? for producing accounts for both General in the market segment that we choose to Top professional sports personalities and Life Insurance business. I needed operate. To our employees, I want NICO inspire me a lot. They all have a great work to understand the nature of transactions to be an employer that gives all our ethic. the business if I was to be able to do my employees, especially the loyal, committed job properly and decide the nature of and hard working; opportunities to realise 10. What is your message to Malawi’s accounting treatment that was required their dreams. I want NICO to enhance its aspiring business leaders and for each transaction. This was not possible role as a Corporate Citizen to another level entrepreneurs? without understanding the meaning of the by ensuring that we are discharging our They should believe in themselves, learn litany of technical terms that are there in corporate social responsibilities to the full. and always follow the “basics” of running insurance. I asked my colleagues to explain a business. These are key ingredients to to me the meaning of the various insurance What is your big ambition? success. terms. Many times they did not give For the next couple of years, my focus will me explanations that were convincing. I be on making NICO a much stronger group decided that the only way I could deal with financially. Being financially strong isa the challenge I was facing once and for all major ingredient if an entity is to discharge was to study insurance. its various responsibilities successfully and consistently. 3. What sort of ambitions do you have for NICO Holdings going forward as 4. How do you see the role of the CEO a catalyst of change in Malawi and evolving in the next say five to ten beyond? years? There are many. In short, I want the NICO I see the environment being more Group to be relevant and value adding to all sympathetic to CEO’s that inspire their

30 2016 Issue 1 | Malawi Insurance Times

Interview with Donbell Mandala, Chief Operating Officer (COO), NICO General Insurance Company Ltd

In a recent interview with Malawi Insurance Times, Donbell discussed about his new role and responsibilities as COO for NICO General and how he plans to leverage his past experience in his new position to help strengthen the company’s leadership role in the market.

1. Give us a brief history of NICO General Insurance Company Ltd NICO General was formed as a short term division of National Insurance Company which was incorporated in 1970 as a composite insurance company (Now NICO Holdings Limited since 2001). NICO General is a market leader in the short term insurance industry in Malawi and has consistently been in that position for a long time and has commanded an average of 35% market share over the years. The vision of the company is to be the leading insurer in Malawi delivering world class products and services. Its mission is to provide innovative and quality insurance products and services to its clients whilst adding value to all interested stakeholders. The values that govern the corporate philosophy of the company are; integrity, care, quality service, accountability, service, transparency, ethical standards, health and environmental awareness.

2. Yours is a newly created position. What will you be doing? What do you hope to accomplish during your first year at the helm? The position of a COO is much diversified but in brief it involves managing the underwriting, claims, production and sales and marketing (including research and development) side of the business. My role also extends to lead the execution of strategies developed by the top management team especially operational insurance as you are no doubt aware the strategies. Malawian economy is predominantly As a COO, the other role is to help I am a fast learner agrarian. define the strategy that underpins the thus able to drive We are also consolidating our CEO’s vision and take a leading role to partnerships with banks, micro-finance implement it. effective strategies institutions and international insurers as we believe significant growth will also 3. What are clients saying and asking for the company to come from these partnerships and also for in today’s market? developing products for the rural masses. Clients in the modern environment adapt constantly We will also be alert to all other new are asking for service that meets their to a fast changing business opportunities that our economy expectations. The economic environment will present to us. is harsh and clients are demanding value corporate and external for money on any services sourced. Every 5. What specific management strengths client wants to be treated as a king. Time is environment. do you bring to NICO General? money and most of them want their claims For 16 years I was a Broker and 80% of paid yesterday to ensure they don’t lose our business is sourced from Brokers out on full indemnity. 4. Where will the most significant hence I understand their expectations and Most clients are also looking for comfort growth occur in the company in the therefore work on tailor made solutions service where they should be able to next few years? to satisfy those expectations either be transact most services in the comfort of As our business follows the fortunes of underwriting or claims. their homes or offices or cars through the economy, at NICO General we have I am a fast learner thus able to drive mobile technology. aligned our growth plan on agricultural effective strategies for the company to adapt

32 2016 Issue 1 | Malawi Insurance Times ,

constantly to a fast changing corporate and external environment. Interview My major strength is also able to translate strategic vision into action. In addition, I am a situational manager with Delvin Khongono, taking advantage of varying situations and circumstances and leading my team to Managing Director, AON Malawi achieve targets and strategies without fail.

6. Where would you like to see NICO General in 5 years’ time? I would like to see NICO General maintain its market leadership position on Gross Written Premium as well as profitability, consistently give a positive return to shareholders, remain professional, remain innovative and expand the range of services/products offered and also be an employer of choice in our market.

7. The penetration of insurance in Malawi is still very low. What do you think is the reason and what is the way out? I think the economic climate in Malawi contributes a lot to low penetration as most of the prospective clients consider insurance as a luxury or the last expense to incur and they would rather prioritize on other services. In addition most of the products marketed are for middle income people and above and Malawi has very few people under this bracket and hence low market demand of insurance. The insurance industry is also somehow to blame as very little has been done to promote insurance and attract the uninsured masses. One needs to understand that insurance is a push product and very few people wake up every day wanting to buy Effective 1st January 2016, Delvin Khongono, rose from the position of insurance! Finance Director to Managing Director of Aon Malawi, one of the most As an industry, we need to do a reputable insurance broking firms in Malawi. Excetps: lot to promote our industry through public sensitization clinics, work with the regulator and other stakeholders to 1. Give us a brief history of AON. introduce insurance literacy weeks. Aon’s fast-paced growth began in 1982 when Ryan Insurance Group We also need to design our products to merged with Combined International Corporation. In 1987, that company trap the lower income end of the population was introduced to Wall Street as Aon, a Gaelic word meaning “Oneness.” (most Malawians are under this bracket) as an uptake of insurance at this level will Throughout the 1980s and 1990s, strategic acquisitions and organic growth result in significant growth of the industry fueled Aon’s expansion in the global insurance marketplace. Over the past and also increase penetration. twenty years, we have acquired some of the most well-known players in the insurance and consulting industries, including Hudig-Langeveldt, a provider 8. Any final thoughts you would like to of insurance protection for cargo ships that was founded in 1680. Although not share with our readers? all our acquisitions have this depth of history, many have been notable players Most clients have a bad perception of in their respective fields for years: insurance and this might be coming from • Rollins Burdick Hunter a bad experience or inherited perception. • Reinsurance Agency However, insurance is of benefit to anyone • Miller, Mason & Dickenson as it mitigates the risk that an individual • Alexander & Alexander or a company is exposed to and allows • Benfield Group the insured to be reinstated to the original • Hewitt Associates position one enjoyed before the loss. But one piece of advice I need to offer is Although Aon is a major leader in virtually every market it serves, size is not that it is also important to choose the right our primary goal. We aim to be the world’s most responsive, client-focused insurer. The right insurer is the one that insurance and consulting services company. understands your risk, gives you value for Aon is the leading global provider of risk management, insurance and money, has a capacity to pay a claim of any reinsurance brokerage as well as human resources solutions and outsourcing magnitude and will not make a drama out services. Aon has 72,000 employees in more than 120 countries. of a crisis. To page 34

2016 Issue 1 | Malawi Insurance Times 33 From page 33 4. Where will the most significant 7. The penetration of insurance in growth occur in the company in the Malawi is still very low. What do you next few years? think is the reason and what is the way Backed by broad resources, industry We will be targeting the Group Life out? knowledge and technical expertise, Assurance schemes as we have seen that First reason is low disposable incomes professionals help a wide range of clients there is a lot of untapped business for a and also lack of awareness of benefits develop effective risk management and broker to move in and make a difference of insurance products as insurance is workforce productivity solutions. as most of these schemes are direct with basically viewed as a product to corporate the Life Insurance companies. We also and not individuals. The industry must 2. You took over as Managing Director want to expand into agriculture insurance take a leading role in sensitizing the of AON Malawi in January of 2016. on our short term business. population the benefits of having an What do you hope to accomplish insurance cover for their houses. We have during your first year at the helm? 5. What specific management strengths seen a lot of residential properties being My major task is to increase our client do you bring to AON Malawi? constructed over the years and yet not retention rates, and this can only come My finance background coupled with much has translated into the penetration about by offering unique risk solutions that 16 years managerial experience in the of insurance meaning to say most of these are differentiated from the market, thus, insurance industry, will propel me to high valued properties are not covered. lead Aon into greater heights but I will Aon will continue to remain the broker of There is a market out there waiting to be also introduce new innovations on how choice in Malawi. insurance broking ought to be conducted mined by the industry. to match with the changing business 3. What are clients saying and asking trends in Malawi as well as the global 8. Any final thoughts you would like to for in today’s market? environment. share with our readers? Clients are looking for business partnership I would like to see the industry competing relationship with their brokers and not 6. Where would you like to see AON in offering excellent client service as well transactional (Post Office insurance) Malawi in 5 years’ time? as being professional in all our dealings broking. They want an insurance broker to I would like to see Aon continuing to within the industry. We must always work move with them at all times and offering maintain its dominance in the Malawi with the highest degree of integrity and risk solutions in all of their business insurance broking market by offering honesty. operations and not just passing documents tailor made risk solutions to all our from insurer to client and client to insurer. various blue chip clients.

Available at Central Bookshop, Chichiri Shopping Mall, Blantyre Grey Matter Bookshop, Game Complex, Lilongwe

34 2016 Issue 1 | Malawi Insurance Times

Interview with Grant Mwenechanya, Chief Executive Officer, Britam Insurance Company Ltd Real Insurance rebrands to Britam Insurance

1. Why was the company rebranded to Britam Insurance? It’s because of change in shareholding structure of the company. Real Insurance We are one of the group was acquired by Britam Holdings in August 2014 which meant the 65% oldest general shareholding by Real Insurance of Kenya in insurance companies Real Insurance Malawi was now owned by Britam Holdings so we had to wear a new in Malawi, our roots face to align with the new shareholder. can be traced as far 2. Tell me more about Britam Insurance back as 1959 when We are one of the oldest general insurance companies in Malawi, our roots can be we started trading traced as far back as 1959 when we started trading in Malawi as Royal Insurance. The in Malawi as Royal company was a branch for Royal and Sun Insurance Alliance Group PLC until December 1999 when the group reorganized its operations in East and Central Africa. The company Britam CEO, Grant Mwenechanya changed its name to Real Insurance in 2008 and then to Britam Insurance in 2015. Britam Group is head quartered in Nairobi Kenya and it is listed on the Nairobi Securities Exchange. In Kenya apart from dealing with general insurance, Britam also deals with Life Insurance, asset management and development and banking. In Malawi, for now, we are into general insurance only. Our head office is in Blantyre and we have branches in Lilongwe, Zomba, Mzuzu, Kasungu, Mangochi and Limbe.

3. What should your clients expect now that you have become Britam? Britam is a very strong brand with footprint Britam board of directors and management team pose with Blantyre City Mayor (seated 3L), Councillor Noel Chalamanda and RBM Director of Pension and Insurance Supervision, in seven countries which always strives to Mr Noel Mkulichi (seated C) at the launch of the Britam brand in Malawi. abide by internationally recognized best practice. Our clients should expect exciting 5. Digging deeper into the brand name 6. It’s always a challenge to retain products, good customer service and quick itself, how do you feel the Britam business and get new business. But in your particular case, do you claims settlement driven by advanced name will drive your future? How do information technology system. feel increasing pressure to do that by you feel the new brand will benefit lowering prices? the business? 4. What’s the response to the No, there is no pressure. Britam does not Britam is a strong brand as I have already rebranding from brokers/clients believe in competing on price but on service been like so far? said it has a very strong asset base in the delivery. Lowering prices compromises Well, the response has been good so far, we region and we will benefit from the group quality of service and that is the route that are getting the support and we are happy synergies such as new products, capital we cannot go. Our operating principles are with the response from all our business requirements and technology just to hinged on professionalism and operational partners. mention a few. excellence.

36 2016 Issue 1 | Malawi Insurance Times The “Pompo-pompo” mindset By Dr Chiwoza Bandawe

he story is told of a wealthy man who went to another village for a visit. There he saw an imposing mansion three stories tall. He found it very 7. What do you see as being the key impressive and complimented the owner on this great achievement. issues currently facing the insurance TThe owner thanked him and invited him on a tour. Together they went industry and how are those issues up to the third floor where they took in a commanding view of the countryside. going to evolve in the future? After the wealthy man returned to his own village, he decided he wanted the same First and foremost is the performance thing. He summoned a builder and described what he wanted in mind. The builder told him “You are talking to the right man because I am the one who built that of the economy, high inflation, high mansion!” The wealthy man was very pleased, “Great! Then you know exactly what lending rates, unstable currency affects I want. Please start as soon as possible”. The builder got together his team and work investors big time, consequently there commenced. Having never been involved in construction before, the wealthy man is little investment and that means no one day decided to visit the site to see how the building was progressing. When he new business for insurance companies. arrived on site he was shocked by what he saw. Instead of the imposing building he Companies down-size, there is high was expecting, he was shocked to see a huge hole in the ground with people laying unemployment which leads to increased cement in it. “What is the team doing?” he asked the builder. “They are working on crime as people have to survive, leading to the foundation” he replied. “Why?” “Because we build the first floor on top of the increased number of claims. So, apart from foundation of course!” The wealthy man was confused. He asked: “But why do we reduced new business opportunities, there need a first floor?”. The builder thought the wealthy man was joking and decided to is also increased claims incidences. play along: “Well, we need the first floor in order to build the second floor on top of it” the builder replied. “And you need the second floor for… what exactly?” asked The second issue which is also indirectly the wealthy man. Now it was the turn of the builder to be confused because he could related to the first one is fraud which is see that the wealthy man was serious. The builder replied: “Sir, obviously, we’ll put rocking the insurance industry. This varies the first floor on top of the second floor”. “No! Stop!” The wealthy man exclaimed. from actual manufacturing of accidents “This is a big mistake. I’m glad am here to clear it up. I only want the third floor. You to mere exaggerations of amounts of don’t need to build the foundation and the first two floors. Just building the third claim where an incident indeed occurred. floor will save us a lot of time and money!” Whichever way, fraud is fraud and has to Many people think like this wealthy man. They want instant riches, instant be stopped. The key to these is that as a success, instant good health, instant loss of weight without understanding that there nation we have a duty to turn around the is a foundation that has to be laid first. We have become known as the “Pompo- economy and start again working for what pompo” generation. In order to do well in life there is need for us to first “build we want to have. the necessary framework and create the necessary conditions” writes American Tao philosophy writer, David Lin. When we look around at those who have become 8. What message do you have for successes in our society we often forget that behind all the success is sheer hard work clientele? and lots of sweat. Those who kill our brothers and sisters living with albinism, want instant and magical riches. Those who steal and are corrupt want shortcuts to instant My message is that our clients made the wealth. Wealth is built over time. It is in fact not something that happens to you but right choice to choose Britam and the it is a reflection of your consciousness that is of how you think and operate in your potential clients are always welcome. Our mind. An important foundation therefore is to watch how you think. Those who are values are respect, integrity, innovation our success stories carefully laid their foundation and gradually and slowly built and passion. Britam will be with them themselves up to where they are. It took years. They started small but were patient every step of the way. enough and planned strategically. You want to become a successful business person (third floor)? You need to move slowly, taking a step at a time, first working very hard (foundation), saving money (first floor) and investing wisely (second floor) being committed to each step. Make hard work part of your life pattern and you will see that disciplined effort comes naturally. The reward will be visible for all to see!

This article was first published in the Weekend Nation of 18th June 2016. The author is an Associate Professor in Mental Health at the University of Malawi, College of Medicine

2016 Issue 1 | Malawi Insurance Times 37 Success Lessons from LEICESTER FC By Dr Matthews Mtumbuka

e now know that the champions for the popular English Premier League (EPL) Ware Leicester City Football Club. This is a professional football club that has no track record of winning big trophies at national or international levels. In fact, we know that in the last couple of decades, the EPL has mostly been dominated by Manchester United, Manchester City, Arsenal and Chelsea. If we extend the years further back, then we can throw in a fifth team in the name of Liverpool. Even if we extended furthermore, we will not find Leicester City FC. In fact, this team was only recently promoted back to EPL after spending several years in the lower division. Such a dramatic story is worth noting and even more, we need to explore what lessons we can learn from this unique achievement. doubt or hesitation in anyone involved in plan. It is well known that Leicester FC One clear lesson is that anyone can be the ‘project’. played a different game before Christmas number one. You, too, can be a champion From Leicester’s success, we also confirm as compared to the game they played after in your chosen field. the great principle that you don’t change Christmas. In the first-half of the League, What Leicester FC have achieved means that which is working. We know from Leicester FC did not mind how much goals you, too, need to identify your chosen statistics shared from the league season that they conceded, provided they scored more activity where you want to shine. Leicester Leicester FC changed the player formation goals than the opponent. However, as the FC did not just become champions by very little, in fact, they had the least count league progressed, they changed strategy. simply being lucky. They planned for it of changes for the positions that players They tightened up their defence and began and worked consistently hard for it. What played. Basically, they played almost to allow very few goals in and they scored we read and hear is that Leicester FC the same players each in his position. less goals, making their wins now much trained hard and they were a very united They only made 27 changes to the team narrower. You can argue that as time team. Beyond everything else, they have throughout the season compared with an passed, their team was likely to tire and so a manager who had a good plan which average of 95 changes for the clubs in EPL! they needed to play a lot more efficiently worked. He believed that they could win For sure, this must have had the effect of and less combatively. This strategy worked the league and he made his team believe each player becoming a great expert in his and produced the right results. the same. Without belief, it is not possible position. Imagine playing with a team that In your pursuits, you need to keep at all to win something of the magnitude of is full of professionals each a specialist in learning, adapting and evolving, in the English Premier League that Leicester the position he plays. Plus, that the players response to the changing environment. FC won. get to know each other really well and Do not keep your plans static. Make them In your life, too, you need a good plan they know how to coordinate themselves dynamic! Good luck as you reflect on the that you execute with total accuracy. In without having to learn too much about unexpected crowning of Leicester City addition, you need to believe 100 percent each other’s way of play during the FC as Champions of the English Premier that you will win. If you have people competitive games. League. supporting you, you need to convince them It is also important to keep learning and to also believe like you. There should be no adapting as you keep implementing your

This article was first published in the Nation on Sunday of 22nd May, 2016.

Dr Matthews Mtumbuka is a motivational speaker and columnist with two weekly articles published by the Nation. He has presented motivational speeches at many companies and organizations across Malawi and abroad. He is the Cluster IT Governance Lead – Malawi & Zambia for Airtel.

38 2016 Issue 1 | Malawi Insurance Times

40 2016 Issue 1 | Malawi Insurance Times 2016 Issue 1 | Malawi Insurance Times 41

Placing a financial institution under statutory management: What does this mean?

By Sunduzwayo Madise

BACKGROUND case of Prime, the occasion still affords manager is paid by the company which has On 3rd June 2016, the Registrar of us an opportune moment to discuss the been placed under statutory management. Financial Institutions (Registrar) issued whole concept of statutory management This is an issue that has at times raised a a notification that Prime Insurance and what it means. question about the transparency of the Company Limited (Prime) would be process as well as fairness. After all the placed under statutory management. The STATUTORY MANAGEMENT statutory manager cannot be paid less than notice effectively stopped the public from n finance law, statutory management is he would normally receive in his daily job. transacting with Prime and restricted the a technical term that refers to a situation Some financial commentators have argued company from accepting new business when a regulator or supervisor (usually that this in itself leads to a further squeeze during this period. However, it indicated Iof the financial services) appoints on the company’s liquidity. that existing policies would remain valid. someone to run a business regulated under The notice also advised that all Prime’s the financial services law. This happens There have been two cases of statutory branches and agencies had been closed for when an assessment has been made which management so far. The first was Finance business. On 5th June 2016, the High Court indicates that the business is in problems Bank Limited. Although business continued in Blantyre issued an injunction on the and needs external intervention. In under the statutory manager, liquidation application of Prime and Goss Mwalilino, Malaŵi, when a financial institution is was the eventual result. However, it must staying the decision of the Registrar. The placed under statutory management, the be added that in the case of Finance Bank, applicants are seeking a judicial review Registrar or any other person appointed it was voluntary liquidation. In other of the decision of the Registrar to place by him shall be the statutory manager. words, it was wound up at the request of Prime under statutory management. In The law requires that once an institution the owners, or shareholders of the bank. short, there is a Court order against the is placed under statutory management, However, issues around its liquidation are Registrar’s decision. In effect, therefore, the public must be immediately informed. still being litigated in court, some 10 years the Court Order restores the status quo Importantly, the statutory manager is later. The other was Citizen Insurance and allows Prime to continue operating. in charge of the management of affairs Company Limited (Citizen). With Citizen, However, it would be naïve of us to ignore of the institution to the exclusion of the the situation was similar to Finance Bank the fact that there is an issue in Court. company’s directors and other managers. but the end result technically different. In Put simply the board and the management the case of Citizen, the Registrar applied In terms of the sub judice rule, we are effectively become redundant once a for a Court order to wind up the company restricted from commenting on issues that statutory manager is appointed unless (involuntary winding up). The matter are before Court and we will wait until retained by the statutory manager. But this went up to the Malawi Supreme Court of the Court makes its determination on the is not without prejudice to any claims they Appeal. This just shows that these cases matter. Save to say, the High Court later may have as employees. are not always straight forward and can varied the injunction order and restricted take time to be resolved Prime’s withdrawals from its bank to sums ut why does the law provide required to cover day-to-day operations, for a statutory manager BUT WHY IS THE CENTRAL BANK including servicing its clients. The Court or management? This is a INVOLVED also said (Kenyatta J): Bmechanism to calm the financial According to the Financial Services Act system and prevent any panic. It is, 2012 (FSA), the Governor of the Reserve The Applicants by themselves, agents, therefore, a preventive measure. Placing an Bank, is the Registrar of Financial Services. directors, employees or whomsoever acting institution under statutory management That is why the two communique that on their behalf are restricted from disposing usually means after an initial assessment, circulated on the 3rd of June, 2016, in any of the assets of [Prime Insurance the business can be saved. The task of the relation to Prime were issued and signed by Company] until the determination of statutory manager is to manage the affairs Charles S R Chuka, the current Governor. the application for stay of injunction or of the institution with the greatest economy Charles Chuka essentially wears two hats; determination of the matter herein. possible compatible with efficiency and as one of Governor of the central bank and soon as practicable report what steps need one of Registrar of Financial Institutions. The reason for this variation is to ensure to be taken at the institution to correct things Both roles require of him to do specific that the assets of Prime remain intact as up or if not practicable whether to transfer duties, the common thread being that they long as the matter is in court. However, the business or to wind it up. It is also although we cannot directly discuss the important to point out that the statutory To page 44

2016 Issue 1 | Malawi Insurance Times 43 are related to the financial sector. But they financial system and responsible for its hopefully help to restructure the Minibus are different roles. smooth functioning” operation business. For starters, it would mean it would sieve out those who are not n Malaŵi, the overarching law that This means the central bank really has prepared to adequately insure their fares regulates the financial sector is the no choice, it has to intervene whenever a (passengers) as well as other road users FSA. There are several Acts which financial institution is in problems because who may come into collision with their Icomprise what is called financial ultimately this will affect its liquidity needs buses. Fundamentally one must ask the services law, such as The Banking Act as well as the whole financial system. The hard question; if the insurance premiums (2010), the Insurance Act (2010) among problems may be corporate in nature for passenger service vehicles are cheap, others. Under the FSA, “a person shall not including bad management or governance what does that say about the quality of operate, as a business, a financial institution by the board. Just to make sure that we products offered and the ability to honour unless the financial institution is licensed break this down, it is important to reiterate obligations when they fall? The downside or registered and … complying with the that liquidity means money. Businesses is that it may shut out those who are terms of the licence.” The licence is issued need money to operate. For the financial struggling financially. Unfortunately with by the Registrar. The reason why the system, it is the money that oils its engine. the market, there is no win-win solution. Reserve Bank of Malaŵi, as a central bank, The money must be there otherwise the is mandated to supervise and regulate the system collapses. Money does matter in From a consumer viewpoint, the reduction financial sector is to avoid what is called finance. Under the law, the Registrar has of affordable insurance products is systemic financial risk or contagion. The the power to act on troubled financial therefore not good. Insurance products G-10 has defined systemic financial risk institutions including placing them under in Malaŵi are arguably not competitively as: “the risk that an event will trigger a loss of statutory management or in the worst case priced to attract those in the lower echelons economic value or confidence in, and attendant scenario, closure. of society. Despite the insurance sector increases in uncertainty about, a substantial lamenting at the low insurance penetration portion of the financial system that is serious SO WHAT NEXT AND WHAT LESSONS in the country, the simple truth is that most enough to quite probably have significant CAN WE LEARN? Malaŵians cannot afford the premiums. adverse effects on the real economy…”. In ith regards to Prime, the They simply do not have the money. all but the most highly concentrated status quo remains. There is For the regulator, a pro-active approach financial systems, systemic risk is normally an injunction restraining the may be better than a reactive one. Once a associated with a contagious loss of value WRegistrar. Therefore save for financial institution starts showing signs or confidence that spreads to parts of the the restrictions placed by the Court on of having problems, the regulator needs financial system well beyond the original Prime, it’s all systems go. It means Prime is to come in and steady the ship as soon location of the precipitating shock. In a open to business and new business and its as possible. Hand-holding may be time very highly concentrated financial system, existing clients will continue being offered consuming and costly but it may just be on the other hand, the collapse of a single the services that they have been receiving. what an institution needs to steady itself. firm or market may be sufficient to qualify Remedial actions implemented early are as a systemic event. But a lesson to all insurance companies, likely to produce a positive outcome. especially those who are deemed small That said, early intervention would also And the reason why central banks are market players, from events that led to mean that in the event that the regulator concerned with systemic risk is because problems at Citizen is that there is a need determines that more drastic action must the buck stops with them when there is to diversify. I would say diverse or die. You be taken, this ought to be done as early as trouble in the financial system. When can simply not afford to put all your eggs possible. Do not delay the inevitable. a financial institution is in financial in one basket. One notable clientele which problems or financial distress, it usually has presented problems to any insurance ow the market argument is looks to the central bank for salvation. underwriter is the minibus sector. This always that the market forces The central bank is not only the issuer of is what the Reserve Bank said about the will determine the price of currency but also injects money into the closure of Citizen: Nfinancial products as well as financial system to stabilise it when the “Having not diversified or penetrated who can and who cannot be a market need arises. The technical term for this is the other insurance sector products, the player. So if you are an economist you liquidity. So when a financial institution effects of closing down Citizen Insurance will simply argue that those who cannot has liquidity problems, the central bank will be localized mainly in the Minibus stand the heat should get out of kitchen – needs to step in and avoid panic spreading motor subsectors. However, due to its and that they should not have been there within the financial system. Such panic size, and lack of complexity and systemic in the first place. The market theory is can lead to contagion. In most countries interconnectedness, it is envisaged that that once there is a void, it will be filled including Malaŵi, the financial services there will be no contagion effects on the because nature hates a vacuum. If you are include banks, credit reference bureaux, other players in the market” a financial analyst you may wish to inquire savings and credit cooperatives, pension as to the reasons why certain companies fund administrators, foreign exchange In other words, the Reserve Bank was which are not big in the insurance sector bureaux and insurance companies saying only the Minibus motor sector have failed or are struggling to make it in would be affected. Secondly, Citizen the insurance sector. If you are a social- Padoa-Schioppa has provided a good was a small player and not systemically activist you may ask what this means for rationale why central banks are involved important enough that its closure would the Malaŵian entrepreneur who attempts in ensuring there is financial stability not spread panic in the financial system. to enter the closed word of finance and within the financial system: For the insurance sector, it is quite clearly for the Malaŵian consumer who may not that not properly underwriting insurance afford the insurance products offered by “A financial system may, and usually liabilities of Minibus operators is suicidal. the other insurers. does, remain segmented to some extent. You can have a healthy stream of revenue However, if a liquidity need emerges initially but when the claims start pouring in a specific segment of it, it is always in, you will not be able to cope. So what is the central bank that bears ultimate the alternative? Ideally, the solution lies in Sundu is a PhD Research Student and Tutor in the School responsibility. This also shows that – with of Law at the University of Warwick. He holds BSc and offering the insurance products at the right LLB (Hons) degrees from the University of Malaŵi and or without formal supervisory functions price (premiums). This would not only an LLM cum laude from the University of the Western – the central bank is a key part of the mean the business is viable but would also Cape.

44 2016 Issue 1 | Malawi Insurance Times 2016 Issue 1 | Malawi Insurance Times 45 The negative side of social media use at the workplace By Diana Mwayi Kambale ACII, AIMIS, MBA

he advancements in internet and social networking circle or follow updates media experiences, the use of internet in mobile technology with its low cost posted by networking friends. Studies have an organisation poses great challenges and of usage has resulted into increased revealed that social media users are lured to risks that calls for evaluation and control. Tuse of social media applications keep informed around-the-clock by visiting Nonetheless, the ultimate responsibility for exchange of information compared to social networking sites. Just like with daily on the use of mobile-based internet or conventional means such as Short Message newspapers, most people have inducement social media usage rests with employees Service (SMS). The internet has transformed to browse through social media sites prior themselves. To a certain extent, the tremendously, allowing users to not only to scheduled activities of the day at the challenges can be managed by organisations retrieve information but also create content. workplace. by establishing policies and controls. As Social media are technologies that facilitate Social media platforms are characterised risk management is being regarded to be social interaction, collaboration and enable with addictive use. The addictive behaviour integral part of today’s business, prudent deliberation across stakeholders. The most of social media has negative effects to the organisations are embracing ICT security popular social media platforms include user and consequently to his productivity. policies in order to effectively secure the Facebook, Instagram, Twitter, LinkedIn, and The consequences of addiction may range infrastructure including protection of the YouTube. In addition, innovations in the from inactive participation in meetings or corporate information. Development and mobile technology has given rise to use of poor work performance due to diversion securing senior management approvals messaging apps. The use of messaging apps of necessary attention to smartphones or for those policies is not only adequate but like WhatsApp is transforming social media other portable devices. Notwithstanding, enforcement is must do task. Depending on environment and its activities. Facebook the spiral effect of navigating from one the nature of the business, IT governance may is the largest social networking site in the social media link to another can claim loss of demand that internet traffic that navigates world with about 1.7 billion active users. valuable time to an organisation due to low through the organisation to be centrally Social media has wide range of benefits employee productivity resulting from lesser monitored or controlled. Some companies to individuals and organisations. The use work hours than expected. have restricted access to social media sites of social media in organisations allows otably, the use of social media during work hours while others have collaboration amongst employees within has a contagious effect especially completely barred access of specific websites heterogeneous and homogenous work among a grouping of people. The through configuration management. environment. Employees can share ideas, Ndisturbing beep of a message Regardless of restrictive measures that may brainstorm on topical issues and easily from a social media application delivered be enforced, the challenges still remain resolve problems through collective on someone’s smartphone, for instance in with the use of own devices that employees thinking. It is undoubted therefore that business meetings, may trigger other fellows bring to the workplace like portable devices its use can enhance knowledge, skills and to check on social media updates or initiate such as laptops, smartphones. It is difficult productivity of employees. Products or a share to social media network. This results to control the information to be stored in services can be advertised through social in compromised active participation and such media in view of simplified transfer media cost effectively through instantaneous to important issues requiring attention and of information from one media to another. delivery of information to a wider group of greater detail. Companies may consider embedding people. Equally, customer feedback can be Social media may also expose a company Bring Your Own Device (BOYD) policies channelled to the organisation easily thereby at risk by threatening the security of its due to increased use of personal devices in promoting a good customer relationship. information and reputation. Through its use, order to provide guidance on acceptable The uptake of mobile-based applications is employees may share company information uses of the devices. However, companies increasing and at a minimum, popular apps with strangers through ignorance. They ought to consider ethical issues in dealing such as Facebook, WhatsApp are installed are privacy concerns in relation to cookies, with such matters. All the same, a risk and in mobile devices. Other organisations recordings and permanence of activity, ethics culture embedded in the organisation have migrated to the use of messaging apps loss of control and ownership of data. system may help employees to discern like WhatsApp as a communication tool Disgruntled employees may form social appropriateness of their conduct regarding for attending to customer queries. Locally, media private groups to discuss issues aimed use of internet applications be it through National Bank of Malawi uses WhatsApp to tarnish the image of the organisation and their own devices or work related tools. for communication of Mo626 customer its management. Generally, organisation otwithstanding the negatives queries requiring prompt attention. may not have control of such circulations effects, social media sites enhance ne of the key aspects for or discussions that may eventually fall knowledge, for instance LinkedIn organisations is the development prey to the public domain. It is especially Nis enriched with contributions of human resource. Human capital complex where personal devices are used from different professionals, groups and Odevelopment is an important issue as mode of communication. Experience has influencers. It is therefore on this aspect that as organisations strive to build talent, retain shown that some company notices primarily a balanced approach can be undertaken. As skilled and professional employee through served for internal purposes had permeated national efforts to increase access of internet recruitment processes and procedures. to social media sites through employee’s to the majority is progressing, the horizon for Social media sites such as LinkedIn may media devices in apt formats, hence earned opportunities and threats relating to social assist organisations to recruit the best talent massive circulation through platforms such media use continues to widen. Responsible and skilled professionals. Organisations as WhatsApp or Facebook. Most often, the use of social media networks is important may also undertake background checks motivation factors behind this sort of act and equally effective management of by reviewing social media profiles of is the contrary views held by employees perceived risks by organisations is required. potential candidates to assess their interests, against particular decisions implemented personality and character. and communicated by management through Nevertheless, they are two sides of every such notices. In the advent of online media, coin. The use of social media by employees some users are becoming become informal at the workplace has its own dimension of journalists with intention of being initiators risks and challenges. of online circulation or breakers of news as The author is a Principal Examiner at the Reserve Bank of Malawi in the Pension and Insurance Supervision Users of social media like Facebook tend events unfold in order to attract the public Department. She previously served as President of the to have a growing appetite to either post eye. Insurance Institute of Malawi. She writes in her personal updates, share news, make comments to a Broadly speaking, with the view of social capacity.

46 2016 Issue 1 | Malawi Insurance Times 2016 Issue 1 | Malawi Insurance Times 47