Botswana Insurance Holdings Limited (BIHL), the leading assurer in the country, is on the verge of broadening its annuity products offering as it tries to meet the ever changing demands of the market, a top official told the annual Pension Society conference this week.
Phillip van Rooijen, a Life Actuary at BIHL, said they are at an advanced staged of rolling out the capital guarantee annuity and the living annuity products into the local market at a time when life assurance companies are increasingly coming under pressure because Batswana are nowadays living longer than in other parts of Africa.
The two new products, both with some amount of flexibility and potentially higher returns, are to add onto the life annuity, which has been the mainstay of the company’s personal insurance product.
The products are expected to bolster the product offering of Botswana LifeÔÇöa subsidiary of BIHLÔÇöand give it a tight grip in a market in which it already dominates.
Botswana Life controls 70 percent of the market in life assurance sector in the country, which provides annuity to members at the time when they reach retirement age or to their beneficiaries in case of the death of annuitants.
Insurance is a set of guarantees in lifetime or death that transfer risk from the annuitant to the assurer that the client upon retirement will get benefits or his beneficiaries if he dies early.
Some of the products that it pushed into the market in the recent years include Mmoloki and its bancassurance product with Barclays Bank of Botswana called Motshegetsi.
He said the biggest problem which they are facing as life assurance companies is that there is shortage of government bonds in the local market to match the investments.
“This may result in the insurance company having difficulty in matching the funds,” he said.
The biggest challenge facing the insurance companies in Botswana is that people are living longer than expected compared to other parts of Africa.
“People live more than expected because of better nutrition and improved medicines that are able to control infectious diseases,” he said.
He said because of life longevity payout for annuity tends to lower tracking those of the developed countries of United Kingdom and United States.
However, Botswana is closely followed by Kenya and South Africa while Zambia’s payouts are the highest because of the low life expectancy there.