Introduction
The Mozambican insurance market, which is considered to have great potential, has seen remarkable growth regarding the number of service providers as well as the sector´s contribution to the economy in recent years. However, numerous challenges remain regarding the inclusion of this financial service, as only 17% of the Mozambican population has access to insurance. This fact is derived from various socio-economic reasons which are mentioned below in this article.
The Mozambican Insurance Market and Its Performance
Currently, the Mozambican insurance market comprises 19 insurers, 3 micro-insurers, 8 pension fund management entities, 158 brokers, and 31 insurance agents. In terms of performance, in 2023 this sector produced 21.4 billion meticais, equivalent to about USD 335 million, representing a growth of 2% compared to 2022. Despite this growth, the insurance penetration rate, the indicator commonly used to measure the “health” of an insurance market, was 1.79% in 2022, which is very low compared to the rate in neighboring South Africa and the global average, which were 11.3% and 7% respectively, in the same period. The low penetration rate indicates that performance is still below the desired level and that the levels of exclusion in this sector remain very high.
Products and Services Not Adjusted to Needs
One of the main reasons for the high levels of exclusion in the sector is the characteristics of services offered. Most of the available packages do not correspond to the interest, price, and real needs of the Mozambican population, which is predominantly rural, with more than 70% living in the countryside, and of low income. On the same token, SMEs, which constitute about 98% of registered companies in Mozambique, face the same dilemma— a lack of products adjusted to their needs.
Low Levels of Financial Literacy
In general, the level of financial literacy is very low in Mozambique. People are unaware of the importance of insurance, the main concepts of insurance products, and the rights and duties provided in the insurance contract. Another major barrier is the language; a large part of the Mozambican population does not speak Portuguese, the official language and many financial education initiatives are in this language.
Main Challenges
Given the challenges presented, it is urgent for companies to develop products and services for the low-income population and adopt technologies to reach new markets, with special emphasis to rural population, which has been gradually increasing its contribution to Mozambique’s GDP. It is important to invest in financial education campaigns in local languages. Other challenges include developing services that meet the needs of small and medium-sized enterprises, aiming to promote the space for micro-insurance in the country.
Conclusion
Despite its growth, the promising Mozambican insurance market continues to face many socio-economic challenges, which creates opportunities for innovation through the introduction of new financial products and services (affordable and adjusted to the needs of unprivileged groups), leveraging new technologies to reduce costs and lower high levels of financial exclusion in this market.
Social Media: Lwandy Mulhanga (link – www.facebook.com/lwandy.mulhanga13)
