With the April 30 Insurance Act roll out deadline fast approaching, Consumers Association of Malawi (Cama) has warned that Malawi’s general insurance growth is being stifled by rigid premium structures, thereby discouraging public participation. Cama’s assertions follow provisions in the Insurance Act of 2025 which introduced a cash-and-carry regime, eliminating the purchase of insurance on credit and insurance firms have until April 30 to comply. The new law further makes insurance policies valid only upon payment, introducing the principle of no premium, no cover in a bid to to address systemic weaknesses that exposed insurers to insolvency risk.

Cama executive director John Kapito said in a statement that unlike in other countries, the local general insurance industry opts for annual premium subscription, which is not attractive to low and medium income earners. He said the annual insurance payment is a huge amount that cannot be affordable to most Malawians who would prefer a monthly or quarterly payment structure. Said Kapito: “The number of people in Malawi that have insurance policies is small and most of those that buy insurance cover only do so as mandatory requirement for third party motor insurance policies.

“The demand for upfront annual payment for insurance policies will, therefore, deter most Malawians from buying insurance policies.” He said insurance companies have failed to explain reasons behind the need to demand annual prepayment for insurance cover despite low demand for their products and services. Kapito said in many jurisdictions across the globe, people are allowed to buy insurance policies monthly, adding that the requirements for pre-payment of annual insurance cover could affect the insurance industry in Malawi. But in an interview on Sunday, Insurance Association of Malawi chairperson Dorothy Chapeyama said the structure of insurance premium payments is not the primary barrier to insurance uptake in Malawi, which is at less than three percent.

She said insurance operates on the principle of risk assumption, where full cover is granted immediately upon policy inception. Chapeyama, who is also Reunion Insurance Company Limited managing director, said: “Annual premium payment is, therefore, a globally accepted standard designed to ensure that the risk carried by the insurer is adequately secured. “Monthly payments without strong enforcement mechanisms would expose the industry to significant risks, including policy lapses and anti-selection, which could ultimately undermine the sustainability of insurers.” She said flexible payment arrangements are already available on the market, particularly for some corporate clients.

“The challenge, therefore, is not the absence of such options, but rather broader issues such as low levels of disposable income, limited insurance awareness and misconceptions about insurance value,” she said, adding that introducing monthly payment structures in short-term insurance comes with increased administrative and operational costs. In a separate interview, insurance expert Abdul Mageed Dyton said insurers assume 100 percent risk from the inception date of the insurance and require upfront collection of the annual premium. He said commercial banks are now providing premium financing solutions to customers who prefer paying premiums on a monthly basis.

“Under premium financing, banks pay the annual premium to the insurance company at the inception of the policy and in turn allow customers to pay the banks in 12 monthly instalments. The solution is convenient and affordable,” said Dyton, who is also Libertas General Insurance Company chief executive officer. The Reserve Bank of Malawi Financial Stability Report indicated that Malawi’s insurance industry recorded strong growth in capital, assets and profitability in 2025, but liquidity pressures and risk exposure continued to weigh on the sector. The report shows that sector capital increased by 39.2 percent to K73.9 billion while the industry-wide solvency ratio stood at 45.4 percent.