In an exciting collaboration between Minet Malawi, Britam, and The Daily Times - Malawi's leading newspaper - we are thrilled to introduce a groundbreaking initiative that will redefine your Wednesdays. Welcome to the Insurance Insights Column – a weekly rendezvous with the world of insurance and contemporary issues that matter. Every article aims to illuminate the intricate landscape of insurance products and relevant topics that impact us all. The articles will be educative at all levels, catering to both practitioners and non-practitioners.
As published in The Daily Times (Malawi) on February 21st, 2024
The origin of insurance in Malawi dates back to Akafula, Amaravi and Nkhamanga kingdoms. It is not the intention of this column to give history about the old kingdoms and their lives – that is a story of another day. But one thing worth mentioning is that modern insurers ought to give credit to the ingenuity of the country’s early settlers.
We all understand that Akafula, Amaravi and others lived together in close-knit societies for social, economic and political reasons. Communities provided their own food, shelter and security against acts of foreign hostility and natural risks. Similarly, in times of joy and other achievements, they celebrated together.
The spirit that the early men held was ‘ours,’ not ‘mine.’ To all intents and purposes, the origin of modern insurance points to this spirit of ‘ours.’ For starters, insurance is transacted based on six principles - insurable interest, indemnity, contribution, proximate cause, subrogation and utmost good faith.
Insurance that was practiced by our ancestors was operated on voluntary basis, although societal pressures were applied by leaders to compel conformance. Society members pooled together resources. The resources ranged from material to moral support. Mind you - there was no money, then. Modern insurers refer to these types of contributions as premium. Disbursements were made from the pool to support unfortunate members.
This practice is still present in many communities in Malawi, today. In many communities, when there is a funeral, for example, members of that particular community make contributions called chipepeso and send it to the bereaved family. The contribution that is made to a bereaved family is similar to the formation of an insurance pool that supports the adversely affected members. Unlike today, in those days, continued membership was the main factor for one to benefit from pooled resources.
Contributions to the pool varied from hut to hut depending on ability and number of members in a hut. The more the people in a hut, the bigger the contribution and vice versa. In essence, building of the pool was based on what modern insurance people refer to as equitable premium.
Even in the old days, there were occasions when pooled funds failed to deliver the intended purpose. In times of drought, for example, the pooled resources would be stretched to the limit. The entire society was exposed to adversity.
Modern insurers borrowed a leaf from the early man by throwing exclusions into an insurance policy. For example, drought is not an insured risk under indemnity-based insurance. Risks that were impersonal in cause and effect were not entertained. This is true with modern insurance - risks that affect a wide area and a large number of people are not insurable under standard policies. It is the responsibility of a society as a whole to assist the affected people. This is the role that Department of Disaster and Preparedness plays in Malawi. In the old days, when communities suffered a catastrophe, members would solidly face the challenge together as a society.
Modern insurance practice rides on the back of social programme traditions of the first dwellers of the country. There is a small difference between the way insurers in Malawi conduct business and the way insurance is transacted elsewhere. However, that small difference makes a big difference between them. The difference lies in the way insurance in a particular country has evolved and is being modernized by the incumbents.
Insurance landscape in Malawi is changing and is doing so rapidly. Social insurance programmes in our villages and urban communities are weakening. Conventional insurers continue to market their products amongst our uncles, aunts, grand-parents, grand-nephews and grand-nieces in the villages and emerging rural growth-centers. As more and more people migrate to Blantyre, Lilongwe and Mzuzu, the survival of social insurance programmes in rural areas is diminishing.
Views from the top are that modern insurance practice has its roots in rural social programmes as practiced by the first occupants of the country. Suffice to say that today, the former is thriving at the expense of the latter, which with time, sorry to say, social insurance will be relegated to abyss.
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