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VOL. 8, ISSUE 1 (2026)
The effects of reinsurance premium outflow on the growth of the reinsurance industry in Zambia
Authors
Deborah Mafu, Dr Joshua Munkombwe, Erastus Mwanaumo
Abstract
The study aimed at investigating the effects of reinsurance premium
outflow on the growth of the reinsurance industry. This research addresses a
significant problem: Zambia's heavy reliance on foreign reinsurers, which
results in substantial capital outflows, limiting local industry growth.
Understanding this issue is crucial for strengthening Zambia's economic
stability and promoting local investment. The study was guided by a set of
specific objectives. These were: (i) To explore the factors driving reinsurance
premium outflows from Zambia; (ii) To examine the regulatory factors
influencing risk retention within Zambia's domestic market; (iii) To examine
the challenges faced by local reinsurers in retaining risks; (iv) To design
strategies that address reinsurance premium outflows. A mixed-methods research
design was employed. A sample size of 154 respondents was adopted for a target
population of 251, these encompassed policymakers, representatives from the
reinsurance industry, insurance industry, the regulator, financial analysts,
and academic experts in finance and economics. Stratified sampling was used to
select the sample size. For purposes of collecting primary data, the study
utilized structured questionnaires and in-depth interviews. Quantitative and
qualitative data were analyzed using STATA 14.2 and ATLAS. ti 9.0,
respectively. Findings indicate that 67% of respondents cited capacity
constraints among local reinsurers as the primary reason for transferring risks
abroad, while 51% emphasized the perceived expertise of foreign reinsurers.
Regulatory challenges, such as solvency requirements and capital constraints,
were also highlighted as significant barriers to local risk retention. From the
findings, 56% of participants suggested that while there is a moderate overall
influence on the decision to transfer risks, specific factors like capacity
constraints among local reinsurers and the perceived expertise of foreign
reinsurers play crucial roles. It was also found that 44% of respondents
identified capacity constraints, perceived expertise, and financial strength as
significant influences on the decision to retain risks locally, emphasizing the
importance of local capabilities. Challenges such as a lack of capital (62% of
respondents), solvency requirements (48%), and lack of regulatory support (53%)
were recognized. While the Insurance Act No. 38 of 2021 offers opportunities
for improvement, 71% of respondents called for flexible capital requirements,
localization of specific insurance lines, and streamlined processes. Based on
these findings, the study recommends establishing reinsurance pools to
consolidate capacity and mitigate outflows. The regulator should prioritize
enhancing local reinsurers' capacity by adopting flexible capital requirements
and streamlining regulatory processes. Investments in technical skills
development programs and advanced technology adoption are also advised. These
insights provide actionable steps for policymakers, regulators, and industry
stakeholders to improve local retention, foster industry growth, and reduce
dependence on foreign reinsurers. The study underscores the need for strategic
policy interventions to strengthen Zambia's reinsurance sector and bolster
economic resilience.
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Pages:6-10
How to cite this article:
Deborah Mafu, Dr Joshua Munkombwe, Erastus Mwanaumo "The effects of reinsurance premium outflow on the growth of the reinsurance industry in Zambia". International Journal of Management and Economics, Vol 8, Issue 1, 2026, Pages 6-10
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