Govt urges RBM to be vigilant on errant insurance firms

The Malawi Government through the ministry of finance has urged the Reserve Bank of Malawi to penalise the errant insurance firms as one of bringing sanity to the industry.

The minister of finance Sosten Gwengwe was speaking in the National Assembly on Friday saying the Reserve Bank of Malawi should take action on errant companies to ensure Malawians are not deceived.

The members of Parliament bemoaned the malpractice of insurance companies which take years to compensate claimants despite the standing regulation of 14 days from the day the claim was made.

Currently, the insurance market remains underdeveloped with a penetration rate drifting around four percent. Last year, the claims were valued at K26. 2 billion, up with K3. 6 billion as compared to registered claims in 2020.

“There might be a valid reason such as the claimant failing to provide the firm with necessary documentation for processing the claim, failing which, the claimants need to be compensated within the first 14 days from the day the claim was lodged,” said Gwengwe.

He said on the part of the delay caused by the insurance firms themselves, all laid down procedures should be followed.

Members of Parliament also heard of an undisclosed medical health insurance firm which collected premiums from the policyholders and disappeared on the market.

Gwengwe said Reserve Bank of Malawi has the mandate to ensure such practices are not increasing on the market.

He assured that relevant authorities will get to the bottom of the matter to ensure that it doesn’t happen again.

“The Reserve Bank of Malawi is a regulator of financial services supervises the market. We will be asking the RVM to be a little bit more vigilant with insurance companies.

“If such red flags are noted it takes action to ensure Malawians are not deceived. In the case of the issue on the floor, that one medical health firm received premiums and disappeared on the market, I have asked the honourable member to provide me with the information so that the right authorities should get to the bottom of it,” assured Gwengwe.