Writer Ian Armitage
Project manager Eleanor Watson
Agnes Chakonta, the Managing Director of Madison Life Insurance Company Zambia (MLife), has a vision, a clear goal: enhance the penetration of life insurance across the country. She says less than five percent of Zambia's insurable public are insured, and that there is "real potential" for life insurance, which "improves the well being of the society at large."
Insurers like MLife are doing all they can to build capacity and tap into this.
"Life insurance provides funding for the long term development of our country," Chakonta says. "The market is growing all the time."
MLife has a rather interesting history. Today, it is part of the LSA Group and performing well, but it was actually the first private sector composite insurance company to enter the liberalised insurance market in Zambia. Back then it was a subsidiary of the Meridien Group and it enjoyed early successes. That was until 1995, Chakonta says, and the liquidation of Meridien International Bank Ltd (MIBL).At that time management successfully bid to take-over the company.
"The Meridien Group collapsed and Madison was acquired in a management buy-out," she says. "A new law proclaiming that no composite companies should operate in Zambia after December 2006 prompted Madison to split the existing company into two separate specialist companies earlier in 2006: Madison Life Insurance Company Zambia Limited and Madison General Insurance Company Zambia Limited.
"The main object from the outset was to provide a first class client service."
Under the watch of Lawrence Sikutwa's LSA Group, the Madison brand has become a household name.
"I think we are doing well," Chakonta says. "We are currently big in the market and it is all because in 2010 we picked up a new direction in terms of business. We looked to become more profitable and focused on long-term products."
The shift paid off and the results are good. Last year MLife grew by 40 percent and a similar level of growth is expected this year.
"That's the target and that sort of growth would take us into market leadership."
Will it succeed? "What gives us the edge is that we are innovative and that is driving the business forward," Chakonta says. "We always come up with new products in the market and new ways of doing business. Of course we have a wide range of products and can cater for a broad spectrum of the market and we are able to meet different needs in the market. We've been able to bring in large volumes of business and new customers and because we are a customer-centric organisation we always want to hear what the customer thinks and that drives our innovation. It means we are ahead of what people's expectations are, here in the market. That is a differentiator."
Those attributes are vital in what is a fast changing world. "In terms of the industry, there are a lot of new companies coming in. I think we are one of the biggest insurance company in Zambia and currently there are about 26 players in the market. There are always new players coming in, in general and life insurance. Local Companies are also coming in from South Africa looking to tap into Zambia's potential as well as local players."
The increased competition has resulted in a fair amount of "undercutting" which has "impacted volumes," says Chakonta.
"I'm hoping the regulator will come in and regulate the rate – that will benefit premium," she pleads.
Of course, the reason everyone is so keen to get a strong foothold is the country's obvious growth potential.
"The potential is massive. Penetration rates are below five percent which is incredibly low and life insurance penetration maybe as low as one percent here in Zambia."
Micro-insurance is one key area.
"There is a lot that can be done in that space and we are going out into the market and bidding to directly increase our penetration."
Micro-insurance is nothing new to MLife, which has long seen the opportunity to penetrate the low-income market.
"We all know – if you look at Africa – the majority of people are living in poverty implying there is tremendous potential in micro-insurance."
MLife has traditionally used the partner-agent model in this respect, dealing with larger microfinance institutions (MFIs) and conducting most of microfinance business through them.
Under this model, legally the MFIs are the policyholders. In practice, the MFIs act as insurance agents in return for either a fee or profit share.
This has enabled MLife to reach markets it wouldn't ordinarily be able to reach by capitalising on the client base of the MFI. In turn, the arrangement legally permits the MFI to sell micro-insurance to protect its loan portfolios.
"That is how we have traditionally done it but we are going beyond that; we are going directly to the client we are trying to match with the product," Chakonta says. "The low-income is where the future growth lies and where most Zambians are found."
MLife underwrites individual life insurance policies, group life insurance policies, credit life insurance policies, gratuity policies, funeral expenses insurance policies and personal as well as group pension plans. Before becoming involved in the mirco-insurance arena in 2001, the company focused on the corporate market and the higher end of the individual market.
"I think this goes back to our innovation and ability to think differently," says Chakonta, who is clear on one thing: life insurance improves the well being of the society at large.
"People are in need of insurance. They might not even realise it is something that will help alleviate poverty. We are going out there to educate the people about how they can cover themselves, their items etc., and we are also raising life standards.
"For me, we are adding value."
And the market continues to grow. "What has changed in Zambia? Why is insurance more popular? Well because people are more educated and getting more and more knowledgeable about insurance. They see the benefit of insurance and know what they want. They appreciate it helps mitigate loss.
"Also our economy is growing and more and more people are banked. We have the financial structural development programme (FSDP) which is helping Zambians improve their financial understanding and conduct. That was never the case before and it has given us mileage and the initiative to get out there."
The secret to MLife's success? "We have come to appreciate the value of smart partnerships and we have good working relationships with various stakeholders i.e. brokers, mobile phone companies, banks and MFIs etc. We take the initiative to know what is happening around us and look at what we can improve through dialogue with our clients.
"Internally we as an organisation is we are clear about our vision, mission and values. These guide us in achieving our set goals from time to time. This has been the cornerstone of MLife's success."
To learn more visit www.mlife.co.zm.
Copyright is owned by Africa Outlook and/or Outlook Publishing. All rights reserved.