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  1 Name : Peter Hambiya Application No : 27633 Program : Bachelor of Business Administration Course : Capstone 2 TEXILA AMERICAN UNIVERSITY ZAMBIA LUSAKA CAMPUS CAPESTONE PROJECT TOPIC: INSURANCE PENETRATION IN ZAMBIA TABLE OF CONTENT Introduction …………………………………………………………. 1.0   AIM ………………………………………………………… 1.1   OBJECTIVES ………………………………………………………… 1.2  WHY THE INSURANCE PENETRATION IS LOW IN ZAMBIA - ……………… 2.0  Chapter one 1.0 INTRODUCTION The Insurance industry has also been steadily growing from 1971 when the industry became a monopoly under the Zambia State Insurance Corporation following the 1968 Economic nationalization Reforms. Therefore, between 1971 and 1991 Zambia only had one insurance company and brokers.  2 Following the liberalization of the economy in 1992 the numbers have significantly increased with 27 insurance companies and 49 brokers at the end of July 31st 2014. The industry also now has two local reinsurance companies, 279 agents and a number of other players. However, the insurance penetration and growth has not grown significant as expected. The study will bring out issues and factors surrounding the penetration and growth of insurance Industry in Zambia.  After 1991 Zambia started liberalizing its economy and its finance sector, leading to the entry of new financial institutions. Since deregulation in 1992, a number of locally registered insurance companies have emerged. The Insurance Act 1997 was amended in 2005, allowing insurance companies to provide life insurance, the insurance industry recorded an overall increase of 18% in terms of Gross Written Premium (GWP) turnover during the year ended 31 December 2015. In monetary terms, GWP increased to K2.10billion in 2015 from K1.83billion recorded in 2014 The Insurance Penetration Ratio (GWP to GDP ratio) stood at 0.67% in 2015 compared to 1.5% in 2014. The GWP in general insurance stood at K1.38billion in 2015 from K1.21billion in 2014. Under long term insurance, the GWP turnover as at December 2015, stood at K717million from K650 million in 2014. The industry had the following players as at 31st August 2016:  3 3 Reinsurance Companies 2 Reinsurance Brokers 22 General Insurance Companies 12 Long-term Insurance Companies 45 Brokers 223 Insurance Agents 10 Claims Agents 11 Motor Assessors 8 Loss Adjustors 1 Risk Assessor Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property.   Insurance contributes a lot to the general economic growth of the society  by provides stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources. 1. Provide safety and security: Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event. There is always a fear of sudden loss. Insurance provides a cover against any sudden loss. For example, in case of life insurance financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents etc. 2. Generates financial resources: Insurance generate funds by collecting premium. These funds are invested in government securities and stock. These funds are gainfully employed in industrial development of a country for generating more  4 funds and utilised for the economic development of the country. Employment opportunities are increased by big investments leading to capital formation. 3. Life insurance encourages savings: Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment. It develops a habit of saving money by paying premium. The insured get the lump sum amount at the maturity of the contract. Thus life insurance encourages savings. 4. Promotes economic growth: Insurance generates significant impact on the economy by mobilizing domestic savings. Insurance turn accumulated capital into productive  5 investments. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy. 5. Medical support:  A medical insurance considered essential in managing risk in health.  Anyone can be a victim of critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy.
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