ZSIC Life living up to its name

Previously beset by operational challenges, company is now profitable

VICTOR KALALANDA, Lusaka June 15, 2021

 

ZSIC Life is one of the oldest insurance companies in Zambia

ZSIC managing director Christabel Banda

IMAGINE this: you start paying part of your salary to a friend, who promises that when you die, they will use that money to take care of your children by footing their daily bills and taking them to university.

But when you finally breathe your last, your friend fails to honour their promise because they absolutely have no earnings or savings, to be able to foster your children or bear financial responsibilities left in your wake.

If you had known that this would happen, probably you would never have trusted your friend and never would a dime of your hard-earned income have ended up in their pocket.

In the insurance industry, such a friend depicts insolvency, which dogs insurance companies and often precipitates their death, with the distinctive exception, however, of the buoyant state-owned Zambia State Insurance Company (ZSIC) Life.

Proving to be a far cry from other companies that tend to be the indictment of the insurance business because of poor administration, ZSIC Life is literally living up to its name—it’s giving life.

Ever since its transformation agenda was set in motion in 2017, at the behest of Government’s investment arm, the Industrial Development Corporation (IDC), ZSIC Life has created the financial solidity any Zambian would be looking for before they can choose an insurance company for protection, either in the event of death or if they fell short on school fees for their children.

In order to make the insurance company a pure success story—a mandate which IDC is carrying out for every state-owned enterprise (SOE) in Zambia—Government sought the skills of Christabel Banda, an insurance, finance and audit guru, to serve as managing director of the previously loss-making SOE.

“I joined ZSIC Life in 2017,” says Banda. “Initially, I came in on an acting basis. I was brought in to kick-start the transformation of the organisation. IDC took over the shareholding of the institution early in 2017 and one of the key issues when they took over the organisation was the aspect of ensuring that the entity is transformed totally and I was brought in as part of that agenda . . .  I came in on an acting basis for about six months before I was made to compete for the position that was advertised nationally. Then I was substantively confirmed in 2018 in March. There were a couple of aspects of the business that just needed a fresh pair of eyes in terms of the reorganisation of some of the processes in terms of how we were running the business.”

Under the new leadership, in 2018 the company, whose business entails paying out a sum of money either on the death of the insured person or after a set period, launched an ambitious and exacting strategic business plan that has seen it post profits consistently, becoming the most improved SOE in 2019.

Running from 2018 to 2020, the new strategic plan sought to reposition the company by increasing shareholder value, exceeding customer satisfaction, improving operational effectiveness and efficiency, and emerging as the employer of choice on the market.

In its ambitious drive to ensure that SOEs are revitalised on behalf of all Zambian people, the IDC ensured that not only did ZISC Life—which is one of the oldest insurance companies in Zambia, originally part of the composite insurance company called Zambia State Insurance Corporation Limited—achieve its set objects in the new agenda, but also went on to exceed them.

Operating as a full stand-alone entity delinked from ZSIC Holdings Limited, and having celebrated 50 years of the existence of the “ZSIC” brand on the Zambian insurance market, ZSIC Life recorded, in practical terms, a 49.6 per cent growth in premium income, closing at K194 million in 2018 compared to K129 million recorded in 2017.

Such positive growth was attained through an increased customer-centric approach that capitalises on ZSIC Life’s widely spread branch network and agency workforce, thereby reaffirming its unique position as the definitive National Life Insurer.

Besides, cost management and control were priority areas for ZSIC Life in 2018.

The company cut down on unnecessary expenses and ensured that resources were spent in productive areas, a move which resulted in a cost-to-income ratio of 47 percent, a reduction from 58 percent recorded in 2017, and a net profit after tax of K27.6 million.

Furthermore, to ensure that there was full compliance with the International Financial Reporting Standard (IFRS) 9, a provision of K11 million was made in the financials, in addition to a K16 million cover for the actuarial deficit under the company’s defined benefit scheme. The combined effect of these provisions was a reduction in the shareholders’ funds by K0.5 million.

In this strategic plan period, ZSIC Life experienced “phenomenal growth,” as the company’s managing director puts it.

The organisation’s income growth by about 150 percent also reflects the reforms of the automation it has undergone, which has sped up processes.

In exceeding customers’ expectations, ZSIC Life has seen the payment of claims increase to K67.4 million in 2018 compared to K57.9m in 2017, and it has also paid a total of K23.9 million to pensioners, cementing its leadership position in the insurance market as the largest holder of the annuity book on the Zambian insurance market.

The company has reached historic highs under IDC’s oversight by raising its mainstream and social media profile, introducing new products and graciously tending to the needs of its employees.

In its mandate to improve the corporate governance of SOEs in Zambia and demonstrate how a government can successfully do business in a liberalised economy, the IDC’s performance targets, which include implementation of cost-saving measure, growth in market share, innovations towards job creation across sector value chains, and implementation of shareholder directives on transformation and restructuring of SOEs, are year in year out being met by ZSIC Life. 

As a profit-making company now warming towards listing on the Lusaka Securities Exchange, ZSIC Life now has launched a new strategic business plan.

“Having gone through the transformation agenda, the next focus now is to sure that we enhance our customer experience using our improved digital platforms, so the key focus area in the next three years will be to ensure that as customers interact with the ZSIC Life brand, they go back filling happy and satisfied and also to ensure that we’re completely digital,” says Banda.

With IDC as the ballast it needed in its operations and management, ZSIC Life’s value proposition is increasingly becoming unbeatable.

As more Zambians seek insurance services, they will have nothing to worry about: a profitable company like ZSIC Life will readily have them covered in any eventuality.