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Modelling Extreme Rainfall in Zambia using the Generalised Extreme Value Distribution
(University of Lusaka, 2024) CHILUFYA, Mwansa
This paper delves into modelling Zambia's monthly rainfall using extreme value theory. A survey of the literature is included in Chapter Two, outlining the development of extreme value modeling and highlighting its multidisciplinary applications. The empirical review examines extreme value theory (EVT) from global, regional, and local viewpoints, demonstrating its varied uses in different climatic conditions. The study methodology is described in Chapter Three, which uses a hybrid approach with an emphasis on the explorative design. For model specification, the Generalized Extreme Value (GEV) distribution was selected. The analysis is based on data from the Climate Change Knowledge Portal of the World Bank Group, covering the period from January 1901 to December 2021. Chapter Four explores the results of the data analysis making use of the summary statistics and descriptive statistics to see what the data looks like. The monthly rainfall data's stationarity is confirmed by the Augmented Dickey-Fuller Test, which is an essential component of trustworthy time series modelling. After parameterizing the GEV distribution, diagnostic plots confirm that it is appropriate; the Fréchet type is found to be the best fit. Estimates of return levels and the likelihood of experiencing intense rainfall events augment the study's understanding.As thresholds are raised, the likelihood of excessive rainfall decreases, which is consistent with increased uncertainty in the prediction of more extreme storms. The trend of return levels is rising, suggesting that there may be more intense rains in the future even though the probabilities of these intense rains isn’t huge.
Keywords: Extreme value theory, GEV distribution, Fréchet distribution, return levels, stationarity, climate change.
Analyzing the Effects of changes in Mortality Rates on Life Insurance Pricing in Zambia: A Case Study of ZISC Life
(University of Lusaka, 2024) NAMUTOWE, Kaluzi
This research delves into the intricate relationship between changing mortality rates and the pricing dynamics of life insurance premiums in Zambia. Focusing on the life insurance sector, specifically the impacts on policyholder premiums, the study aims to unravel how mortality rates, and external factors, including age and gender, influence the financial sustainability of life insurance products. The study's foundation lies in recognizing life insurance as a crucial financial safeguard against unforeseen circumstances, primarily the policyholder's death or incapacity. To contextualize the research, Zambia's insurance landscape is outlined, emphasizing the prevalence of two main types—General insurance and Life insurance—with a specific focus on the latter.
The core problem addressed is the significant role that mortality rates play in determining life insurance premiums. Drawing parallels to a similar study conducted during the COVID-19 pandemic, where rising mortality rates prompted life insurance companies to revise premiums, the research underscores the need for life insurance companies in Zambia to continuously monitor and adapt to changing mortality trends. Notably, the study highlights shift in mortality rates attributed to factors such as improvements in healthcare, climate change, geographical location, lifestyle changes, and diet, all of which are pivotal in shaping premium calculations. The study employs a case study approach, examining ZISC Life insurance company in Lusaka, Zambia. It explores the effects of changing mortality rates on life insurance pricing, drawing conclusions from the gathered data and offering insights into revenue trends, market share, growth patterns, mortality trends, pricing dynamics, and the correlation between mortality rates and premiums. The conclusions point towards the dominance of Whole Life Policies in one of the insurers, emphasizing the need for diversification in product offerings. Growth trends, despite a temporary decline during the pandemic, indicate a resilient market, encouraging insurance companies to adapt to evolving customer needs. Gender-specific mortality rates underscore the importance of gender-sensitive policy pricing, and the linkage between mortality rates and premiums emphasizes the necessity of accurate risk assessment. The research recommends a dynamic pricing strategy based on regular assessments, diversification of product offerings, enhanced customer education on premium determinants, adaptation to changing demographics, exploration of additional factors influencing premiums, and preparation for external factors. These recommendations, if incorporated into strategic planning, position insurance companies to navigate the evolving landscape successfully, fostering sustained growth and competitiveness.
Exploring the Impact of Labour Force Variability on the Performance of the Health Insurance Industry in Lusaka
(University of Lusaka, 2024) MUNDOPU, Nawa
The purpose of this research was to look into the risk implications of the variability of the labour force on the performance of health insurance companies in Lusaka. As the city's economic landscape changes, it is critical to understand how the labour market conditions affect the performance of health insurance, as a result the accessibility and affordability of healthcare services for individuals and households. This study sought to shed light on the potential risks faced by insurers and policyholders in Lusaka by examining the relationship between employment, unemployment and health insurance performance. A mixed-methods approach was to be used to achieve this goal, combining quantitative data analysis and qualitative interviews (survey). Quantitative data was gathered from a variety of sources, including the Zambia Statistics Agency for demographic information and the National Health Insurance Management Authority (NHIMA) for health insurance contributions data and yearly performance. To identify relationships and the possible risk variables, these datasets were analysed statistically using techniques such as regression analysis and correlation tests. In addition, qualitative interviews with persons living within Kanyama constituency were carried out. The outcomes included a thorough understanding of the impact of employment and unemployment on health insurance performance in Kanyama constituency as it was observed that when there are more unemployed people in a community the less likely it is to find people with health insurance and vice versa. The data from NHIMA gave insights on how this can affect insurance companies which was evident in the yearly financial performance records as the reduction in the employed labour force coincided with reduction in contributions and reduced investment returns.
The following recommendations were made inlight of the findings; The Kanyama Constituency's unemployment problems should be addressed in order to help people afford health insurance. The government and health insurance companies also need to be adaptable and take steps to promote economic resilience, as well as a review by the government of its policies to create an environment that is favourable to the growth of the health insurance industry in Lusaka.
An Investigation on the Impact of the National Health Insurance Scheme on Healthcare in Lusaka Zambia
(University of Lusaka, 2024) NG’OMBE, Abton
An investigation of a five-year-old national healthcare system represents a comprehensive exploration into the dynamics, challenges, and potential improvements within a country's healthcare infrastructure. Such an endeavor is essential in understanding the long-term impact of healthcare policies on a population's health and well-being. Over the course of five years, researchers are expected to delve into various facets of the healthcare system, aiming to assess its effectiveness, accessibility, and efficiency. This extensive study would likely involve rigorous data collection, encompassing factors such as healthcare expenditure, the distribution of healthcare facilities, healthcare outcomes, and patient satisfaction. By analyzing this data, the study can identify areas in need of improvement, assess the impact of policy changes, and pinpoint disparities in healthcare access among different demographic groups.
Furthermore, a 5-years of operation enables researchers to observe trends and developments over an extended period, such as the introduction of new medical technologies, changing disease patterns, and the evolving healthcare needs of the population. Ultimately, the findings of this study can inform evidence-based policy making, guiding the government and healthcare institutions in implementing reforms that enhance healthcare accessibility, affordability, and overall quality. The results may also shed light on innovative approaches to addressing public health challenges, ultimately contributing to the betterment of the nation's healthcare system and the well-being of its citizens.
An Analysis of the Impact of Market Risk Management on the Solvency of Insurance Companies in Zambia: A Case Study of Professional Insurance Zambia
(University of Lusaka, 2024) MUNGALA, Agathar
This research aims to analyze how the effective management of market risk impacts the solvency of insurance companies in Zambia. The principal goal of this research is to determine the relationship between an insurance company’s solvency status and the market risk management techniques employed by conducting a case study of Professional Insurance Zambia. In order to achieve comprehensive analysis, methodologies such as the Value at Risk Analysis are employed. This research employs a combination of quantitative analysis and case study methodology. Data on market risk management practices, solvency ratios, and financial performance metrics of Professional Insurance Zambia are collected through interview questionnaires and secondary data collected from the company’s official website. Multiple linear regression model is employed in the study (with the dependent variable being the solvency ratio and the independent variables being total assets, total liabilities and claim reserves) in order to determine the relationship between market risk management and insurance solvency. Furthermore, Value at Risk Analysis is used to estimate the maximum potential loss in the company’s portfolio in a given one year period. Additionally, an in-depth examination of the risk management strategies and models implemented by Professional Insurance Zambia is conducted through interview questions. The findings of this study reveal a positive significant correlation between effective market risk management practices and the solvency of insurance companies, particularly in the case of Professional Insurance Zambia. That is a proportionate increase in the amount of total assets held by the firm leads to a proportionate increase in the solvency ratio and consequently an increase in the total liabilities of the company leads to a decrease in the solvency ratio and vice versa. The results from the Value at Risk Analysis indicate that at 95% confidence level, the maximum potential loss to be experienced in a class of motor insurance policies within a year (one year period) is utmost 67.10% (0.6701). The analysis of risk mitigation strategies from the interviews carried out at the company highlights the importance of proactive risk management measures in reducing exposure to market risks and safeguarding solvency levels. In conclusion, this research underscores the critical role that market risk management plays in ensuring the solvency and financial stability of insurance companies like Professional Insurance Zambia. By implementing robust risk management strategies and models, insurers can better protect their portfolios against adverse market movements, thereby enhancing their overall solvency position and not only enable an increase in the contribution percentage to the total national GDP but also increase insurance credibility and trustworthiness. Therefore, this research will provide useful insights into improving risk management frameworks which will help sustain and maintain insurance solvency amidst changing market conditions.