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Insurance firms grapple with finances

ZAMBIA’S local insurance firms are still grappling with inadequate finances to cater for large firms in the mining sector.
Currently, large mining companies in Zambia have been insuring their assets abroad, robbing the country of much-needed revenue which could boost gross domestic product (GDP).
Pensions and Insurance Authority (PIA) cites inadequate financial capacity among local insurance firms as the major hindrance to tap in the mining sector, which has firms with huge assets locally.
PIA manager for analysis and policy-pensions Goodson Kapaso said large firms like mining companies are insuring their assets from other countries because local insurance companies do not have adequate financial capacity to bring them on board.
Mr Kapaso said this in an interview recently on the sidelines of a workshop for business journalists held in Lusaka.
“At the moment, Zambian insurance companies do not have the capacity to single-handedly underwrite the assets of mines because of the huge amounts of assets and finances involved,” he said.
He, however, said the insurance industry has experienced an increase in up-taking insurance policy, attributing it to growth in income levels.
Mr Kabaso said the growth in income levels has been necessitated by growth in the economy.
“When there is growth in the economy, people experience growth in income levels, thereby up-taking insurance services,” he said.
Meanwhile, the insurance industry recorded an overall increase of 18 percent in terms of gross written premium (GWP) turnover as at December 31, 2015.
In monetary terms, GWP increased to K2.1 billion in 2015 from K1.83 billion recorded in 2014, translating in the insurance penetration ratio (GWP to GDP ratio), 0.67 percentage point compared to 1.5 percent in 2014.
Meanwhile, the industry sector recorded three reinsurance companies, two reinsurance brokers, 22 general insurance companies and 12 long-term insurance companies as at August 31, 2016.
Others were 45 brokers, 223 insurance agents, 10 claims agents, 11 motor assessors, eight loss adjustors and one risk assessor.                               BBC