Malawi’s Insurance Sector Defies Odds, Posts Notable Gains Amidst Economic Challenges in 2025
Key Business Points
- Malawi’s insurance industry saw a 39.2 percent increase in capital to K73.9 billion and a 45.4 percent solvency ratio, exceeding the regulatory minimum, but faces liquidity pressures that may impact claim settlements.
- Revenue growth in the general insurance market doubled to K67 billion, driven by increasing insurance uptake, inflation, and product innovation, but low liquidity levels and elevated claims ratios pose challenges.
- Insurers are strengthening risk management practices and improving client communication to address climate-related risks, insurance fraud, and operating costs, which are crucial for the sector’s long-term resilience and economic stability.
Malawi’s insurance industry has experienced significant growth in 2025, with a substantial increase in capital and assets, as well as improved profitability. According to the Insurance Association of Malawi (IAM), the sector’s capital grew by 39.2 percent to K73.9 billion, while the solvency ratio stood at 45.4 percent, more than double the regulatory minimum. This growth is attributed to rising insurance uptake, inflation-driven increases in insured asset values, and gains from product innovation, digitalisation, and service improvements. As Dorothy Chapeyama, IAM president, noted, the year was "a mixed bag," with insurers being well-capitalised but facing challenges in meeting short-term obligations due to liquidity pressures.
The industry’s revenue growth in the general insurance market was impressive, doubling from K33.4 billion to K67 billion within a year. However, this growth is being undermined by low liquidity levels, which could impact the timely settlement of claims. The sector’s liquidity ratio fell sharply to 63.8 percent in June 2025 from 90.5 percent in December 2024, well below the recommended 100 percent benchmark. Chapeyama attributed this to delayed premium remittances, slow reinsurance recoveries, escalating operating costs, and elevated claims ratios linked to road accidents, rising spare parts costs, and insurance fraud.
Climate-related risks are also a growing concern, particularly during the rainy season when insurers face increased claims from flooding, property damage, and traffic accidents. To address these challenges, insurers are strengthening risk management practices, improving client communication, and ensuring adequate reinsurance arrangements under the ongoing Risk-Based Supervision (RBS) framework. The industry has also stepped up insurance awareness, tightened underwriting standards, engaged stakeholders to combat fraud, and adjusted pricing for weather-related products.
Analysts emphasize that the insurance sector remains vital to economic stability, providing a risk-transfer mechanism that supports business continuity, investment, and household resilience. However, it is crucial that liquidity and risk governance challenges are effectively addressed to ensure the sector’s long-term resilience. As Chapeyama noted, the industry is working to strengthen its risk management practices and improve client communication to address these challenges. By doing so, the sector can continue to support Malawi’s economic growth and provide a safety net for businesses and households. In Chichewa, this can be referred to as "Kusungidwa kwa Ife", or managing risk, which is essential for the sector’s success.
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