Zambia will this year issue the long-awaited microinsurance regulations and sandbox guidelines.
Mrs. Namakau Mundia Ntini, Registrar of the Pensions and Insurance Authority (PIA), revealed this at the ‘Inaugural TAG Annual Inclusive Insurance Conference and the 9th Eastern and Southern Africa Regional Conference on Inclusive Insurance’, hosted by the Microinsurance Technical Advisory Group (TAG Association) and PIA in Livingstone, Zambia.
The issuance of the microinsurance regulations will add Zambia to the list of jurisdictions that have taken initiatives by adopting laws and regulations to support the evolution of more inclusive insurance systems, either by encouraging existing insurers to serve low-income segments (downscaling) or by allowing microinsurers to evolve and integrate with the formal insurance sector (upgrading).
Microinsurance means different things for different supervisors, and in most jurisdictions, microinsurance is not considered a separate type of insurance and is just viewed as insurance available in small sums. This could be cited as one of the reasons for the nondevelopment of a separate set of rules for microinsurance in many jurisdictions, but it will be interesting to see the approach Zambia takes. According to statistics shared by the PIA, 6.8% of the people in Zambia today have at least one non-mandatory microinsurance product.
In 2022, the Zambia Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, issued Commencement Order No. 83 of 2022, which operationalized the Insurance Act, 2021 (new Act), which provided a new and comprehensive legal framework by significantly overhauling and repealing the Insurance Act of 1997, including the introduction of a new microinsurance license category.
The new Act was followed by subsidiary legislation, the Insurance (General) Regulations, 2022 (Regulations). The new Act and Regulations (new Legislation) are of material significance to all insurers, reinsurers, brokers, agents, and auxiliary service providers. The new Legislation also impacts offshore non-life insurers and offshore reinsurers, as well as offshore insurers and reinsurers, brokers, and insurance groups with interests in Zambia.
However, the Regulations issued did not apply to microinsurance businesses. Therefore, businesses have anticipated that the PIA will issue regulations while simultaneously familiarising themselves with the new obligations imposed on them by the new Legislation and putting measures in place to ensure compliance within the various timelines.
With the introduction of the new microinsurance licence category by the Insurance Act, as well as an increased focus in Zambia on insurtech offerings, microinsurers are likely to find it easier to reach their target groups, with products delivered via apps on mobile phones and leveraging phone features such as cameras to help buyers reduce paperwork and time to purchase. The combination of microinsurance and phone technology will accelerate the development of an entirely new type of insurer in Zambia.
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