FDH Financial Holdings Limited Chief Executive Officer, Thomson Mpinganjira, on Saturday predicted even harder times for players in the insurance industry as the economy continues to sail through troubled waters.
He was speaking in Blantyre during the Insurance Institute of Malawi (IIM) Charter Dinner held under the theme 'Opportunities in Adversity: Charting the Course through Economic Uncertainty'.
He said rising inflation, escalating fuel prices and rising interest rates will make life even harder for companies and consumers.
Mpinganjira said things do not look rosy for the industry.
"After going through 2012, I now have every reason to believe we are yet to see the worst. Look at the economy: Inflation around 40 percent and going up, fuel prices rising every month, interest rates at minimum 37 percent and hovering between 43 percent if authorised borrowing and 47 percent in unauthorised. Who knows where they will end up?" Asked Mpinganjira.
He said the prevailing high interest rates will not make it any easier to persuade people to spend more on insurance.
Mpinganjira said insurance companies will also be under pressure to re-capitalise to meet the prescribed minimum capital requirements of the Reserve Bank of Malawi.
He said the new Pensions Act will also be a turning point for the life insurance companies in Malawi it has attracted local and international players who will bring competition and narrow margins.
He said even insurance brokers will have to reinvent themselves following the new RBM directive on premium collection.
"Ihat will no doubt see the demise of the investment income line," said Mpinganjira.
He underscored the need for the industry to focus on survival, recovery and growth strategies.
"Believe it or not, out of chaos, order always emerges and the present state of the economy presents real opportunities to make money," said Mpinganjira, adding: "The challenge is to identify those factors that we are in control of and focus on making them work."
He gave an example of premium undercutting, premium collection, insurance fraud as well as lack of public awareness about the insurance product as some of the issues which must be addressed urgently.
The dinner saw IIM inducting a new executive committee led by Old Mutual's Tawonga Manda and his deputy, Real Insurance's Bywell Chiwoni.
Outgoing President Elias Chipungu thanked IIM members for the support given to his committee during his 12 months at the helm of the institute.
The dinner also saw IIM recognizing those who have qualified for diploma and advanced diploma of the Chartered Insurance Institute of London and Insurance Institute of South Africa.