In this interview with Business journalist CHIKONDI CHIYEMBEKEZA, Singo speaks about the company’s operations and prospects for the future.
Q: Tell us about Smile Life? What does it do, when did it start its operations and who owns it?
A
:Smile Life is the first wholly Malawian-owned life insurance company licensed by the Reserve Bank of Malawi (RBM). It offers life insurance such as Group Life Insurance Cover, Group Funeral Insurance Cover for employees, Group Credit Insurance Covers, Individual and Family Funeral Insurance Covers. The company started its operations on April 1 2009. Smile Life Insurance Company is owned by two Malawian organisations, Smile Holdings Limited with 70 percent ownership and JJN Investments with 30 percent ownership. It is unique from other life insurance companies operating in the country in that all the dividend payable from the profits of the business are paid in the local currency [Malawi kwacha] to the Malawians owners while with the other life insurance companies, the dividends are paid in foreign currency to the foreign owners, a further drain on our scarce foreign currency.
Q
:What challenges have you encountered in the market since you started operating?
A
: Some of the challenges we have encountered in the market since inception are as follows; stiff competition from the life companies that have been in the market for a long time; wait-and-see attitude from big prospective clients who wanted to be sure that Smile Life would survive the market pressures and continue to be in business after the first three to four years of operations before giving it their business, despite the fact that it has in its employ professional staff with vast experience [over 35 years] in the life and pension business; initial inadequate operational capital that negatively impacted on marketing and advertising activities to reach out to many prospective clients; lack of awareness by many employees and employers that life insurance and benefits were separate benefits that required to be handled by separate administrators to bring transparency and accountability in the way benefits processed, administered and managed for the benefit of the employees and the employers.
Q
:How has the performance of the company been over the years?
A
: The performance of the company over the years has been very encouraging. Its achievement in gross premiums is as follows; K22 million (US$52 631) in 2009, K79 million (US$188 995) in 2010, K201 million (US$480 861) in 2011, K271 million (US$648 325) in 2012 and K379 million (US$906 698) in 2013 at a budget of 40 percent. It has paid claims as follows; K5 million (US$11 961) in 2009, K16 million (US$45 454) in 2010, K90 million (US$215 311) in 2011, K105 million (US$251 196) in 2012 and unaudited figures shows it paid K110 million (US$263 157) in 2013.
:
Out of the four life insurance companies operating in this country, Smile Life is the latest entrant on the market having operated for only four years and nine months as at December 31 2013. The other three companies have operated for 12, 42 an (60 years respectively. However, according to a report released by the RBM for the financial year ending December 31 2012, the difference in market share between Smile Life and the other company that has operated for 12 years is only 0.5 percent. The difference in market share between Smile Life and this other company has reduced from 3.4 percent as per the report for the financial year ending December 31 2011. This gradual increase in market share by Smile Life is an indication of the increasing gain in confidence and trust that Smile Life is getting from its clients and prospective clients.
Q: Has the entry of Smile Life in Malawi life insurance industry benefited the economy and Malawians employers and employees in any way?
A
: Yes indeed. When Smile Life entered the market in 2009, most of the life insurance companies were charging very high group life insurance premiums to employers. It was common to find employers to be charged between six percent and 6.5 percent of annual salary for group life cover of three time’s annual salary death in service benefits. Now, most life insurance companies are charging between 3.5 percent and four percent for the same benefits because of the competition brought by the entry of Smile Life in the market. Employers are now also enjoying very flexible and high medical limits. Time taken to settle death claims and general service delivery has also improved. There is now transparency and accountability by life insurance companies in the way they do their business because of the need to separate life insurance and pension business transactions.
Q
:Who are the directors of the company and has the company entered into technical partnership with other life insurance companies?
A
: The directors of Smile Life as follows; Elias Kambalame is the chairperson and the other directors are; James Naphambo, Jolly Nkhonjera and Emmanuel Chinunda. Names of the four additional directors were submitted to the RBM, which is the regulator for insurance companies, awaiting approval. As per the licensing requirement of the Reserve Bank, Smile Life entered into technical strategic partnership with the following companies; Reassurance Partnership: Hannover Re of South Africa. Actuarial Service Support, Alexander Forbes Financial Services.
Q
:Have you been involved in any corporate social responsibility activities since your inception?
A
: Smile Life has been sponsoring Lions Club of Blantyre annual golf fund-raising activities. We have adopted all the Zebra crossings to Namiwawa Primary School which we paint annually. We have adopted a lecture room at Malawi College of Accountancy (MCA) which we have refurbished and provided new chairs and other learning equipment.
Q
:What are your future plans?
A
: After five years of operation, we would like to increase the capital of our business by offering strategic Malawian businesses the opportunity to acquire shares in Smile Life. The aim is to financially empower more Malawians by giving them the alternative opportunity to invest in life insurance business that before the entry of Smile Life in the market was predominantly owned by foreign investors. Malawian businesspeople would be encouraged to acquire at least 10 percent of the shares of the company to be on the board of directors and, therefore, have a say and make an impact in the future direction of the company at board level.
Q
: Lastly, what message do you have for your existing and prospective clients and Malawians in general?
A
: To our existing clients, I wish to thank them for the support they have given us since we opened our doors. To our prospective clients, we wish to advise them that having completed almost five years in the market, any doubts that they may have had regarding our continued existence in the market that could have led to the “wait and see approach” should no longer be the reason for not giving us business.
To Malawian businesspersons/ investors, we wish to encourage them to consider taking up shares in Smile Life when the offers are made some time this year so that together we can prove that Malawians are very capable of starting and running big businesses, especially in the financial sector of the economy.
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