Tanzania Insurance Industry records the fastest growth in 2011

http://dailynews.co.tz/index.php/biz/11318-insurance-industry-records-fastest-growth

Are Insurers losing relevance?

During a presentation at the 2012 IIS Seminar in Rio De Janiero, Michael McGavick, CEO of XL Group P.L.C said that "insurers are struggling to maintain their relevance for policyholders as new risks emerge for businesses and the businesses themselves grow more comfortable with retaining risks."

He brought up that the insurance premium share of worldwide gross domestic product had shrunk from 3.4% to 2.8% over the past 10 years and said that insurers are failing to meet business needs in three key risk areas, technology, energy and supply chain.

Is McGavick right? Are insurers losing relevance? And if so, how do they regain it?

http://www.theinstitute.com.au/en/Faculty/Forums.aspx?g=posts&t=82

 

SADC - Committee of Insurance, Securities and Non-Banking financial Authorities of SADC (“CISNA”)

Source: http://www.sadc.int/english/key-documents/protocols/protocol-on-finance-and-investment/#annex10 

Extracted from the SADC Protocol on Finance and Investment.

ANNEX 10

CO-OPERATION ON NON-BANKING FINANCIAL INSTITUTIONS AND SERVICES

PREAMBLE

The High Contracting Parties:

RECALLING that the Committee of Insurance, Securities and Non-Banking financial Authorities of SADC (“CISNA”) was established in June 1998 by the Insurance, Securities and Non-Banking Financial Authorities in the SADC Region (“the Authorities”);

NOTING that a strategy was developed to give direction to the activities Of CISNA and to contribute to the sound regulation, effective supervision and rapid development of the financial services industries;

REALISING that financial institutions supervised by the Authorities are critical for mobilising savings which are important for the expansion of productive capacity and that such institutions require a supporting regulatory framework:

(a) which will attract the investments required for creating economic development within the Region;

(b) for managing the financial risks faced by the financial institutions and users of financial products and services in the Region; and

(c) which must not only be efficient but also properly enforced;

AWARE that there should be close co-operation between the Authorities for the purpose of carrying out CISNA’s objectives in the pursuit of complementary goals to achieve an integrated and credible SADC capital market;

NOTING the increasing need for internationalization, and harmonisation of financial institutions and the interdependence of the activities of financial institutions due to the use of modern technology and closer co-operation between financial institutions;

RECOGNISING the need to mobilise savings that can be used to expand SADC’s productive capacity;

FURTHER NOTING that broad objectives have been set in the CISNA Strategic Plan to achieve the successful regulation and supervision of non- banking financial institutions and the need to share information.

CONSCIOUS that the achievement of the objectives referred to in the CISNA Strategic Plan will be accomplished at different times and in different phases;

NOTING the establishment of CISNA, the adoption of the CISNA MOU and 100 the obligations imposed on the Authorities in the said MOU HEREBY AGREE as follows:

ARTICLE 1
DEFINITIONS

1. In this Annex, terms and expressions defined in Article 1 of the Treaty shall bear the same meaning unless the context otherwise requires.

2. In this Annex, unless the context otherwise requires:

“Authority” means any organ or entity responsible for the regulation and supervision of non- banking financial institutions in their respective jurisdictions within SADC or any designated representative of such authority;

“CISNA” means the Committee of Insurance, Securities and Non-banking Financial Authorities of SADC and the Authorities;

“CISNA Strategic Plan” means the CISNA Strategic Plan set out in Addendum A to this Annex;

“non- banking financial institutions” means any provider of financial advisory and intermediary services, collective investment schemes, insurance institutions and retirement funds regulated or supervised by their respective Authorities;

“financial products and services” means long-term and short-term insurance contracts or policies, benefits provided by retirement funds, financial advisory and intermediary services, shares, debentures, bonds and other forms of securitised debt, futures and derivative products including commodity derivatives, participatory interests in collective investment schemes, and other securities traded in the respective jurisdictions of the Authorities;

“financial services industry” means the supply of financial products and services by financial institutions throughout the Region;

“jurisdiction” means the country, state or any other territory, as the case may be, in which an Authority can exercise its powers;

“IAIS” means the International Association of Insurance Supervisors;

“IOPS” means the International Organisation of Pension Regulators and Supervisors;

“IOSCO” means the International Organisation of Securities Commissions;

“Requested Authority” means the Authority to whom a request is made in terms of this Annex ;

“Requesting Authority” means the Authority making a request pursuant in terms of this Annex;

“securities” means bonds, shares, stock, debentures, securitised debt instruments, equity instruments, debt instruments, futures and derivative instruments (including commodity derivatives), participatory interests in collective investment schemes, and any similar securities to, or combination of, the aforementioned.

ARTICLE 2
ESTABLISHMENT OF THE COMMITTEE OF INSURANCE SECURITIES AND NON-BANKING FINANCIAL AUTHORITIES

There is hereby established a Committee of Insurance, Securities and Non- Banking Authorities of the Southern African Development Community.

ARTICLE 3
COMMUNICATION AND EXCHANGE OF INFORMATION

1. There should be high-level contact between the Authorities in order to inform each other of any significant changes in their respective regulatory environments with a view to harmonizing each Authority’s approach on the subject covered by the shared information.

2. The Authorities shall put one another on their mailing lists for the receipt of periodicals and other important communications.

3. The Authorities will encourage and enhance contact amongst the staff of the Authorities

ARTICLE 4
INFORMATION SHARING

1. The Requested Authority should use its best efforts to obtain information from its own records or from institutions within its jurisdiction in order to provide a Requesting Authority with information that will allow such authority to fulfil its regulatory and supervisory responsibilities.

2. If any Authority comes into possession of information that would be likely to assist another Authority in administering or enforcing the laws or regulations for which it is responsible, the first-mentioned Authority will endeavour to notify the other Authority of the existence of that information.

ARTICLE 5
REQUEST FOR INFORMATION AND ASSISTANCE

1. The provisions of the Annex on the Exchange of Information and Surveillance of Securities, Insurance and Retirement Activities will, with the necessary changes, apply to: (a) requests for information and assistance; (b) the execution of such requests; (c) the permissible uses of information; (d) the rights of Requested Authorities; (e) confidentiality; and (f) the costs of investigations.

ARTICLE 6
COMPLIANCE WITH INTERNATIONAL STANDARDS (DIAGNOSTIC EXERCISE)

1. In order to assist the legislature with the drafting or amending of legislation that is compliant with international standards, the Authorities shall:

(a) undertake in their respective jurisdictions a diagnostic study, analysis or assessment that focuses primarily on assessing the regulatory framework and supervisory practices in terms of the objectives and principles of the IOSCO, the IAIS and the IOPS;

(b) before submission of the assessments verify such assessments through Authority peer or third party review; and

(c) adopt and develop the required structures in line with the objectives and principles recommended by IOSCO, IAIS and IOPS, if the assessment demonstrates that is what is required.

ARTICLE 7
RELATIONSHIP WITH INTERNATIONAL BODIES

1. The Authorities should:

(a) become members of and liaise with IOSCO, IAIS and IOPS; and

(b) disseminate to other Authorities, who are not members of IOSCO, IAIS and IOPS, information derived from those institutions.

ARTICLE 8
DEVELOPMENT PROGRAMME

1. State Parties agree that, the Authorities should, in order to develop focused programmes for their respective financial services industries, assess the level of development of their non- banking financial institutions with regard to, inter alia:

(a) the supply and use of financial products and services;

(b) level of competition; and

(c) any barriers to development.

ARTICLE 9
HARMONISED FINANCIAL REGULATORY REGIME

The Authorities shall work towards the harmonisation of their respective laws and regulations and regulatory and supervisory practices with the aim of preventing or reducing regulatory arbitrage.

ARTICLE 10
TRAINING AND EDUCATION OF STAFF

The Authorities shall:

(a) ensure that both local and foreign training opportunities are developed, expanded and hosted throughout the Region, and made available to the staff of all Authorities;

(b) identify their training needs;

(c) explore the development programme(s) suitable for their needs;

(d) assist as much as possible with the presentation of such training programmes;

(e) organise and encourage attachments throughout the Region or abroad to provide on-the-job training;

(f) organise attachments and shall mutually agree on the duration thereof.

ARTICLE 11
CROSS-BORDER CO-OPERATION AMONG AUTHORITIES

1. The Authorities:

(a) shall identify cross-border activities that could form the subject of cross-border co-operation amongst Authorities, and between Authorities and foreign counterparts (i.e. the prevention of unscrupulous operations, increased access to information, dual listings, the introduction of legislation to prevent money laundering, including the financing of terrorism); and

(b) are committed to facilitate mutual exchange of information and assistance.

ARTICLE 12
CONSUMER AWARENESS CAMPAIGNS

1. The Authorities shall:

(a) assist each other with the introduction of suitable consumer awareness campaigns for their respective jurisdictions;

(b) share with one another problems identified and methodologies used to promote their respective awareness campaigns;

(c) identify the consumer awareness campaigns and initiatives already introduced in their respective jurisdictions to inform and educate consumers of financial products and services; and

(d) assess whether adequate programmes have been introduced and implement initiatives that will enhance consumer awareness.

ARTICLE 13
MEETINGS AND SUBCOMMITTEES

1. The Authorities shall meet as often as deemed necessary but at least twice each year; and shall by consensus, appoint a Chairperson and Vice-Chairperson for a period of not more than two years.

2. The Chairperson and the Vice-Chairperson so appointed will represent CISNA at meetings of the Senior Treasury Officials.

3. The Authorities shall determine the rules and procedures of all meetings.

4. The Authorities may, by consensus, set up such sub-committees as may be deemed necessary to carry out any specific assignment or duty of CISNA.

ARTICLE 14
REFERRALS

If any Authority believes that a matter falls more appropriately within the jurisdiction of another Authority, or that some joint action is required in dealing with the matter, such matter should be referred to the other Authority as soon as is reasonably practicable.

ARTICLE 15
CESSION AND ASSIGNMENT

An Authority or designated representative of such Authority may not cede, assign or transfer any right or obligation granted under this Annex without the prior written consent of all the Authorities, which consent shall not be unreasonably withheld.

ARTICLE 16
CONSULTATIONS

The Authorities shall assist one another to develop approaches for strengthening the regulation, supervision and the efficiency of the financial institutions in the Authorities’ respective jurisdictions while avoiding, where possible, conflicts that may arise from the application of differing regulatory and supervisory practices.

The Value of Happiness

The Value of a Happiness Economy 

John C. Havens - Executive Vice President - Strategy and Engagement - Yoxi.tv | 17 Aug 2012 

What if generosity were a currency? 

This was a question posed by the Danish chocolate company Anthon Berg for its recent Generous Store campaign. The company opened a pop-up store for one day in Copenhagen last winter, and distributed chocolate as payment to individuals who promised to perform a generous deed for a loved one.

Chocolate lovers posted to the company’s Facebook page, sharing promises like “serving breakfast in bed.” Then they picked up their chocolate payment at the store and essentially broadcast to their social graph to “pay it forward.”

Research suggests that paying it forward is something the average person enjoys. Søren Christensen, a partner in Anthon Berg’s ad agency, says his company’s findings showed that seven out of 10 people were happy when they did something good for other people. But only one out of 10 people ever experienced generosity on a daily basis.

Why the disparity, and why does it matter? 

Two reasons. First, there’s a growing movement to standardize the metrics around well-being that can lead to happiness. Second, the combination of big data, your social graph, and artificial intelligence means everyone will soon be able to measure individual progress toward well-being, set against the backdrop of all humanity’s pursuit to do the same. In the near future, our virtual identity will be easily visible by emerging technology like Google’s Project Glass and our actions will be just as trackable as our influence. We have two choices in this virtual arena: Work to increase the well-being of others and the world, or create a hierarchy of influence based largely on popularity.

Metrics Not Mood 

 If you’re thinking the study of happiness and well-being seems flaky, you’re missing a major trend that’s beginning to influence a number of global economies.

At the recent United Nations Summit, Secretary-General Ban Ki-moon stated that, “Gross National Product (GDP) fails to take into account the social and environmental costs of so-called progress.” In other words, measuring well-being is not the pursuit of identifying the ephemeral emotion of happiness.

It’s about looking at a deeper level of “economic, social and environmental objectives that are most effectively pursued in a holistic manner.” And economics alone are not the primary driver of well-being. Statistics show, for instance, that after a person or family receives a salary of $75,000 per year, increasing the amount of money brought home doesn’t increase a feeling of well-being.

Jeffery Sachs, the renowned economist from Columbia University who edited the first World Happiness Report for the UN, certainly comes to the same conclusion. He said, “The U.S. has had a three-time increase of GNP per capita since 1960, but the happiness needle hasn’t budged.” The report, which provides scientific evidence that happiness can be reliably measured and is meaningful, notes that the U.S. has not as happy as other countries because of a too-prominent focus on boosting the economy — while largely ignoring long-term effects on environment or holistic education. (The Danes, however, were listed as the happiest people on the planet by Sachs’s report — apparently Anthon Berg is onto something with their Wonka-onian economics.)

H(app)athon 

The study of happiness is a burgeoning field of study around the world, with scientists and other experts providing hard data as to the benefits of a balanced approach to well-being versus too singular a focus on money or self.

 “Our goal is to get people thinking more deeply about what happiness is and what is the connection between themselves and their community and world,” says Laura Musikanski, the executive director and co-founder of The Happiness Initiative, an organization inspired by Bhutan’s ideas on Gross National Happiness, also known as GNH. They even created a survey geared to measure 10 metrics of well-being, which include material well being, physical health and time balance.

Her site also contains an excellent history of Happiness Research that provides important data-related insight. For example, although ephemeral happiness may come about due to a combination of luck, timing or fate, the emerging science of happiness proposes that “our actions determine 40% of happiness, and that well-being can be both synthetically created and habitually formed.”

 This may be the biggest reason for our desire to measure this space, and several takes on measuring it have popped up. The Quantified Self movement has exploded and Nicholas Fenton’s practice of chronicling information for his annual life’s report has inspired others to follow his lead via Daytum and other self-monitoring services.

Ariana Huffington also recently announced her GPS for the Soul, an app that launches this June that provides a “course-correcting mechanism for your mind, body and spirit.” The natural next step in this process, then, is to marry the collective metrics of individuals to form a collective virtual picture of a community or country.

Mirroring the goals of GPS for the Soul, it would be simple to map GNH/well-being metrics to existing technology like Mint.com that provides updates on how to maintain material well-being or Project Noah that encourages more access to nature. Via this methodology, our lives could become a virtual H(app)athon, with technology doling out advice on how to flourish, while proactively helping others.

The Efficacy of Fun 

But as with any behavior or state of mind, it will take a village. “A really important part of changing behavior is social reinforcement,” says C. Lincoln (Link) Hoewing, Assistant Vice President for Internet and Technology Issues for Verizon and frequent contributor to Verizon’s Policy Blog. “You start seeing and comparing yourself to others more when you know that other people can find out what you’re doing.” This form of Accountability Based Influence (ABI) is most effective when eliciting a positive response. As an example, Hoewing noted Volkswagen’s Fun Theory campaign, whose Piano Stairs YouTube Video has received almost 18 million views to date. For the campaign, a set of stairs in a Stockholm subway were outfitted with full size piano keys that played notes as people walked on them, resulting in 66% more people than normal choosing the stairs over the nearby escalator. It’s a simple leap to picture this event being geared toward a community metric of well-being, where the GNH for Stockholm would have risen the day of the campaign.

The Currency of Community 

Brands are certainly learning to leverage well-being in the form of corporate social responsibility known as shared value. While bringing happiness to consumers via a product or service is not unique, bringing happiness to a community is just coming intro widespread acceptance. “We want to set in motion an upward spiral of confidence,” stated Starbucks CEO Howard Schultz in his Letter to America last August. This included the company’s Create Jobs for USA program that has seeded $5 million to provide capital grants for under served community businesses. “The idea of the initiative is to create happiness coming from economic well being,” states Adam Brotman, Chief Digital Officer for Starbucks. The company also recently announced its Store Partnership Model where pilot community organizations in New York City’s Harlem neighborhood and Los Angeles’ Crenshaw neighborhood will share in the profits of a Starbucks store. A minimum of $100,000 for each organization will seed programs geared toward job and life skill development, positive learning environments and overall health and wellness in the community. “We’re in the happiness and people business,” says Brotman, referring to the shared value mentality that a social business can be generous and profitable at the same time. “A thriving or happy community is something that’s good for everybody.”

When Actions Create Identity 

In about three to five years it won’t matter if you’d rather not project your actions to the world — your virtual footprint will simply be too hard to conceal. Your preferences combined with the data generated by external forces will in essence make everything, including objects, inherently interactive. “What’s a social network for data?” asks Jim Karkanias, an executive at Microsoft who runs the company’s Health Solutions Group, and has been working on a range of projects that broach the physical and computing worlds. “We’re imagining biology versus silicon as the next platform in which we write software.” Karkanias uses a form of prototyping for his work based on Project Hieroglyph, a movement that encourages science fiction writers to infuse their work with optimism that can inspire a new generation to ‘get big stuff done.’ “Science fiction sets the stage for people to imagine things bigger than reality,” says Karkanias, noting that adhering to practicality in ideation tends to create a narrow experience that limits imagination and hinders happiness.

Data already has its own social networks: RFID tags, M2M (machine to machine) sensors in cars and the Internet of Things let machines trade information without the need for human intervention. The self-tracking craze with humans combined with this ubiquitous data means highly personalized and proactive information can be aggregated to inform our actions on a minute scale. The advent of things like Google Goggles means we’ll be able to virtually see other people’s data as well as eventually record our entire existence. Our lives will be tagged and ranked as semantic information fed into a massive global algorithm that could be geared toward inspiring positive behavior.

Karkanias agrees: “Artificial Intelligence in the form of a perpetual life coach will live at the information level providing guidance on every aspect of your day.” Technology of this kind will likely manifest itself in a reverse Siri interface, with a GPS-like voice guiding you on issues both personal and macro. The societal impact could shift negative personal patterns as well as a community or country’s Gross National Happiness. Karkanias provides an example of this model where you’re in your car and take a route that passes a McDonald’s. As your coach knows your health issues regarding cholesterol, it adjusts the route of your self-driving car to the nearest Whole Foods to map to your GNH/well-being metric regarding health. Likewise, cameras in a subway car utilizing facial recognition technology might scan the face of a woman who is four months pregnant and send you a text to give her your seat to map to her GNH/well-being metric of psychological well being. Emerging services like Sickweather will provide health-related predictive data that will affect whole communities regarding metrics of time, balance and well-being.

Inspiration Versus Ignorance 

Some pundits say that privacy is disappearing, but that doesn’t mean we should let our identity be dictated by outside forces. Unfortunately, people are largely unaware of the repercussions of giving away personal information as we enter a virtual era where information can be accessed by so many parties so easily. “People are not fully aware of the data they generate and how that’s coupled with Artificial Intelligence learning algorithms. It’s creating a different social and economic order and we’re in the midst of that happening now,” states John Clippinger, Founder and Executive Director of idcubed.org and a Scientist at the MIT Media Lab Human Dynamics Group where he is conducting research on trust frameworks for protecting and sharing personal information. He feels the inevitable onset of ubiquitous data meshing with synthetic biology and people’s social graphs can be a positive evolution if the whole process takes place in the open.

This transparency is the key. Fostering a culture based on GNH and mapped by existing technology provides a positive path toward the future. We should emulate chocolatier Anthon Berg and let generosity be our currency. Our lives will be sweeter for the choice.

Source: http://www.theinstitute.com.au/Membership/Member-Services-Portal/Library/Library%20Article.aspx?ArticleId=23f8dcb7-e7fb-4799-876b-705384516f90

What really drives value in corporate responsibility?

What really drives value in corporate responsibility? Few companies are clear about how investing in social initiatives will change stakeholder behavior or the harm a bad strategy can cause.

Source: https://www.mckinseyquarterly.com/Strategy/What_really_drives_value_in_corporate_responsibility_2895DECEMBER 2011 

• CB Bhattacharya, Daniel Korschun, and Sankar Sen

Now that stakeholders—including consumers, investors, and employees—pay increasing attention to the social and environmental footprints of business, corporate-responsibility efforts have moved into uncharted management territory. We see companies reengineering supply chains to make them “greener,” supporting social causes through volunteer programs for employees, or lobbying for human rights in far-flung corners of the globe. As this tide swells, many executives are left with the nagging sense that such investments rest on a shaky understanding of how corporate responsibility creates value, both for their companies and for society. Some investments, of course, produce immediate and quantifiable gains, such as those from recycling or from manufacturing processes that save energy. But often, social investments are expected to yield longer-term benefits as engaged consumers step up their purchases, a broader investor base develops, or new talent flocks to a company’s recruiters. In these more ambiguous cases, how is a manager to know whether stakeholders will indeed respond positively?

Our research, described in greater detail in our recent book, Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value, suggests that while stakeholders’ interpretations of corporate responsibility are multifaceted and far from uniform, it is vital that managers avoid creating an impression that such activities are crowding out core business priorities. In fact, some well-meaning corporate-responsibility activities can actually harm a company’s competitiveness. Consider an experiment. We had consumers rate their own purchase intentions for computer accessories after learning about a company’s product quality and corporate-responsibility activities. Descriptions of the company as having high product quality had a modest positive effect, but for a company with low product quality, the consumer’s willingness to make a purchase actually decreased when it engaged in otherwise positive corporate-responsibility activities (exhibit). In this second case, consumers were wary of these activities, thinking that the company ought to give precedence to product quality.

Related research shows a similar dynamic at work with investors: highly innovative Fortune 1000 companies derive greater financial returns from their corporate-responsibility activities than their less innovative counterparts do. By following a few basic principles, leaders can increase the likelihood that stakeholders will interpret corporate-responsibility initiatives more accurately and thus more positively. Don’t hide market motives. Stakeholders are remarkably open to the business case for corporate responsibility, as long as initiatives are appropriate given what stakeholders know about the business, and as long as companies genuinely pursue and achieve the accompanying social value. Companies should understand that they can pursue profitable core business and corporate-responsibility objectives in tandem, without trade-offs. Serve stakeholders’ true needs. Consumers are drawn to products that satisfy their needs. Likewise, stakeholders are drawn to companies whose corporate-responsibility activities produce solid benefits, which can be tangible (such as improved health in local communities) or psychological (for instance, volunteer programs that help employees better integrate their work and home lives).

Before investing in corporate responsibility, however, managers need to set clear objectives that companies can meet and then, ideally, create programs together with key stakeholder groups. Test your progress. Corporate responsibility acts as a conduit through which companies can demonstrate that they care about their stakeholders. A company should assess its initiatives regularly to ensure that they foster the desired unity between its own goals and those of stakeholders. Calibrating strategy frequently improves the odds that corporate responsibility will create value for all parties.

About the Authors:
CB Bhattacharya is the E.ON Chair in Corporate Responsibility and dean of international relations at the European School of Management and Technology (ESMT), in Berlin;

Daniel Korschun is an assistant professor at Drexel University’s LeBow College of Business; and

Sankar Sen is a professor of marketing at Baruch College’s Zicklin School of Business.

Notes 1
CB Bhattacharya, Daniel Korshun, and Sankar Sen, Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value, New York: Cambridge University Press, November 2011.

Our research examines the two most important stakeholder groups—consumers and employees—to understand how and why they react to corporate-responsibility initiatives. The insights we gained helped us show how companies can develop, implement, and evaluate social-responsibility programs that foster stronger relationships with stakeholders and thus create value for them and companies alike.

 

Africa Insurance review magazine

http://viewer.zmags.com/publication/157b01e6

Page 11 tackles my views on where African Insurance is headed.

USD787m insured losses expected from chinese storms

A word of warning on unregulated cross-border reinsurance transactions....

"The great flexibility of reinsurance treaties that allows effective tailor-made solutions to meet individual insurance company's needs has been abused in the past to design tax avoidance, money laundry and other illegal activities...." Radolfo Wehrhahn- Introduction to Insurance, World Bank Primer series.

 

Legislative changes Insurance Industry Malawi.....

Gazetted on 4th March, 2011, the directives, according to the Insurance Act, 2010 are indicated below as to be enforced by the Regulator- Reserve Bank of Malawi (RBM).  

Risk Management Directive
This directive, gazetted on 4th March, 2011 is formally referred to as Insurance (Risk Management Framework for Insurance Companies) Directive 2011.

The directive requires insurers to have a risk management framework that includes a written management strategy and a risk management function with a person individually responsible for that function. It also requires the board to provide the registrar with risk management declarations signed by two directors. Insurers are also required to maintain a business plan for three years approved by the board.  

Fit and Proper Persons Directive
The directive is formally referred to as Insurance (Suitability of persons associated with ownership and management of insurers and insurance brokers) Directive 2011; it was gazetted on 4th March, 2011.

 Under this directive, the board is responsible for ensuring that responsible persons of an insurer are fit, proper and defined. The insurer is required to implement a written fit and proper policy of fitness and propriety of responsible persons. Initial appointment or change in appointment of a responsible person is to be submitted to the registrar for approval.

The board is also required to assess fitness and propriety of responsible persons annually. The principal officer of an insurer shall be a chartered insurer and have at least 10 years experience of in the industry. Similarly, the principal officer of an insurance broker shall be a chartered insurer or have at least 10 years of senior management experience in the industry.

Technical functions of claims, underwriting and reinsurance are to be managed by chartered insurers. The accounting function of an insurer is to be managed by a qualified or chartered accountant (ACCA/CIMA) and must to be a member of SOCAM. External auditors are required to have appropriate qualifications, and be registered in Malawi with three years minimum experience.  

Corporate Governance Directive
 This directive, also gazetted on 5th March, 2011 is formally referred to as Insurance (Minimum Standards on Corporate Governance for Insurance Companies) Directive 2011. It applies to insurers licensed under the Act.

It is read and applied with the Code of Best Practice for Corporate Governance in Malawi (Malawi Code II) published by the Board of Directors in June 2010. The directive has several provisions applicable to boards of companies.

Among others, the board shall have a minimum of 5 directors and the chairman shall be a non-executive director. Majority of directors and the chairman of the board shall reside in Malawi and the maximum time an independent director may serve on the board is 6 years.

The insurer is also required to have an independent internal audit function, publish summaries of financial statements in a local newspaper and its annual report on its official website not later than 4 months after closure of financial year. The company secretary shall be a chartered company secretary, a lawyer or an accountant.  

Maximum Capital and Solvency Requirement Directive
The directive is formally referred to as Minimum Capital and Solvency Requirement for General Insurers. It was gazetted on 4th March, 2011 and applies to licensed and registered financial institutions transacting general insurance business in Malawi.

The minimum paid capital for a general insurer shall be MK 50,000,000.

An insurer shall be deemed to have sufficient margin of solvency, if it has a solvency ratio of not less than 20%, being a percentage that adjusted net assets of an insurer bears to the net written premium for the corresponding period.  

Premium Payment Directive
This directive, gazetted on 31st May, 2011, is referred to formally as Insurance (Premium Payment to General Insurance Companies) Directive 2011. It applies to general insurance companies, insurance intermediaries, including brokers, agents and all financial and other institutions engaged in the selling of general insurance products.

This directive addresses the problem of outstanding premium to ensure that premium is received by an insurer as and when insurance cover is provided to enable insurers build up appropriate technical reserves. Intermediaries shall cause policy holders to make out all premium cheque payments in favour of insurers.

Quantum of commissions shall be agreed between the intermediary and the insurer or as prescribed by the registrar. If premium on a general insurance product is outstanding for more than 30 days, the insurer shall lapse the cover in the policy and thereby and not pay claims.

The above directives apply to insurance companies doing insurance business in Malawi and applicants for license to conduct insurance business in Malawi. Penalties exist for non compliance.

This development should be viewed as the positive way forward as the industry will have well capitalized companies and policyholder safety will be guaranteed.  A well capitalized, properly run and managed, and open industry will benefit all stake holders in the insurance business.

Excerpts from http://www.iim.org.mw/index.php?option=com_content&view=article&id=137:new-reserve-bank-of-malawi-directives&catid=54:news&Itemid=478

Grabbing the Bull by its horns: The Planned Economic Emancipation of Malawian Masses on my mind....

Madam President, Congratulations are in order.....Politics are not my forte, only one thing is my demand while you are in office.....the empowerment of the indigineous population......this is no racist proposition, it is a plea to put a proud Nyasa people on even keel with investors that have long had the advantage of better banking access, better formulated business plans etc.....I do not wish to see my people in pepertual cycles of servitude and economic desperation which seems to be the current direction, no madam no, it is a truly torturous thought......I do not wish to explain to my children how we became estranged from our ancestral lands.....no Madam no......only one wee wish your excellency: indigenous equity participation in the most complex form in all commercial ventures, tea plantations included.....to control in a way illegal capital flight......to avoid investors that pack and go overnight......to finally truly economically empower the local citizenry and avoid us singing empty national anthem wishes ......to allow true participation in the profits that flow to enabling disposable and discretionary income .......and another little thing Your Excellency, lets sober up the land madness, this issue of mad prices of land will take us nowhere......we can have no proud Malawian man who is unable to provide a home for his family....... and another little thing Your Excellency: pavements for the real masses that make the towns work, folks from Chilomoni, Ndirande who walk to work etc., these folks have to endure the rugged sidewalks of the Kamuzu era dilapidated sidewalks, arriving in town with considerable dust "mileage" deposits on their footwear on a lighter note (thats the Tonga in me speaking); more importantly the comfort of the poor masses Your Excellency- How can we ensure that? can future designers of roads ensure that there is room for both cyclists and pedestrians, as the absence of this at the design stage, results in a constant fight for the scarce resource: the all important Malawi paved road, a nightmare for drivers and perhaps a source of unnecessary accidents...... I beg you Your Excellency in this noisy din where we have all become smart adviser(s).......this time round let us be pro-poor first, then we will see a growth in the middle income sector, a rise in national savings, true economic empowerment to the masses.......Free medication for the over 65 Your excellency in a quasi welfare state approach.....now these for me are truly orgasmic thoughts.....

Premiums to be based on actual risk- Motor Insurance, South Africa

Premiums to be based on actual risk New technologies that track and monitor the driving behaviour of motorists are set to revolutionise the motor insurance industry in South Africa, providing businesses and consumers the opportunity to significantly reduce the premiums they are paying. According to Stewart Somerville, Managing Director at Geotab, the asset, vehicle and personnel tracking group, premiums charged by the short-term motor insurance industry have traditionally been based on the potential, rather than actual, risk that each customer poses. "Insurance premiums are based on a range of factors but are mainly decided through predictions made by a company's actuarial division on the perceived risks that consumers pose." He says that while actuarial forecasting does have merit in enabling insurance companies to assess the likelihood of a claim, new technology can now track and monitor the driving behaviour of individual consumers, enabling an insurer to provide a fairer premium to each customer. "While some insurers are already utilizing similar technology in some form, these advancements mean that insurers can base the level of premium that a customer pays on the actual scientific data collated from their client base rather than a general assumption of the risk they pose. "Statistics do show that the frequency and severity of motor vehicle accidents is highest in the younger age bracket, particularly among young men." "However, there have also been cases where young drivers have automatically had a claim repudiated due to an assumption of wrongdoing on their part without any proof and have been forced to appeal to the Short-term Ombudsman." Somerville says the fact is that some motorists, regardless of their demographic, are more dangerous on the roads than others and should be paying accordingly, while responsible younger drivers should also be paying in accordance with their behaviour. "By using new hardware such as accelerometers in a vehicle - which measures the degree of braking, swerving and harsh turns - an insurer can monitor the behaviour of a driver and consequently offer a reduction in premiums to those who drive responsibly." He says the same technology can also be used to help to prevent insurance fraud - which according to recent estimates by Santam, costs the industry between R2 - R4bn each year. "Accident reconstruction technology now enables one to see detailed analysis of the last 100 minutes of a trip prior to an accident, up to and including impact. This technology is so accurate that it often serves as evidence in legal cases. "For individuals who face having a claim repudiated on the basis that an accident is believed to be their fault this technology is critical in proving their case." "Likewise, for insurers who are often forced to pay out on fraudulent claims, the technology can also be used to strengthen their case, which should eventually translate into lower premiums for the rest of their client base."

 

Time to Dollarise Malawi....

Our Malawi local currency stands no chance in the globalised set up. An excursion outside our borders is proof enough, no one seems interested in the Malawi Kwacha unless they are coming to Malawi. Our currency's journey so far seems to be on persistent nose-dive value-wise in relation to say the US Dollar or British Pound; on the basis of that I understand the reluctance to devalue as per the GOM plc current stand-off with the IMF. Time to "Dollarise" Malawi......time to go back to the Bretton Woods Institution "approved" currencies :-(.

Considerable depreciation in value of the Malawi currency unit the Kwacha from its originally very strong one Malawi Pound/Kwacha to one British Pound exchange rate in 1971 under the British Pound Sterling/Malawi pound par value system of 1965-1973......... the local currency‟s devaluation continued via a number of exchange rate value systems; (a) Peg to weighted Basket of British Pound and the US dollar (1973-1975), (b) The Peg to the IMF SDR (1975-1984), (c) Peg to the Weighted-Basket of Seven Currencies (1984-1994), and finally the (d) Floatation of the Malawi kwacha (February, 1994) (Reserve Bank of Malawi [Online], Evolution of Exchange Rate Determination in Malawi: Past and Present, Available at: http://www.rbm.mw/general_info/index.asp?suburl=currhistory