Former Nico Holdings managing director Felix Mlusu says it is not necessary for local companies to insure their property and investments with foreign-based insurance companies as the local industry has adequate capacity to provide cover for everything in Malawi.
Speaking on the sidelines of a cocktail party organised by Nico Holdings to bid farewell to him following his retirement, Mlusu said payment of premiums to foreign insurance companies was an unjustifiable drain on the country’s foreign exchange reserves.
He called for appropriate regulation to check against the practice.
“One of the challenges facing the insurance industry is the tendency by some companies to insure their property and assets outside the country. This means externalising premiums and draining of foreign exchange. This is not necessary because the local industry has adequate capacity,” he said.
Mlusu said the insurance industry has also been hit hard by Malawi’s struggling economy.
“Inflation is high, resulting in both companies and individuals not being able to insure themselves and their properties. When the economy is bad, insurance is seen more as a luxury than a necessity,” said Mlusu.
He said, however, that insurance facilitates economic activity.
“With insurance, you get confidence that if a misfortune happens, you won’t completely lose out,” he said.
He said increased fraud is also another area negatively affecting the insurance sector.
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