Strategic Plan

2016- 2020

Contents
Introduction.............................................................................................................................3

1
Country Context....................................................................................................................4
Political Context................................................................................................................5
Economic Performance in the Past 5 years......................................................5
Impact of Economic Performance on Our Business and Operations. 6
Prospects for the Immediate and Medium Term...........................................7
Malawis Demographic Profile..................................................................................8
Regulatory Environment............................................................................................10
Our History.............................................................................................................................13
Our Membership Profile..............................................................................................13
Geographical Profile.................................................................................................13
Age Profile.......................................................................................................................14
Our Market Positioning and Competition........................................................15
Our Performance 2011 - 2015.....................................................................................18
Membership Growth......................................................................................................18
Claims....................................................................................................................................20
Fraud Statistics................................................................................................................22
Case Management..........................................................................................................22
Tariff Management.........................................................................................................22
Financial Results.............................................................................................................23
Contribution Income.................................................................................................23
Solvency ratio...............................................................................................................24
Information Technology..............................................................................................25
Human Resources Management............................................................................26
Governance and Performance Management..................................................27
Audit.......................................................................................................................................27
Our 2016 2020 Strategic Plan.................................................................................29
Our Vision, Mission & Core Values.......................................................................29

Executive Summary

2
Introduction and Background
Medical Aid Society of Malawi (MASM) presents its strategic and business plan for the
period 2016 2020.

Economic Outlook
The economy is expected to experience a slowdown in 2015 and GDP growth has
recently been revised downwards from GDP of 5.5% to 3%. Economic performance
is expected to recover in 2016 and subsequent years on the backbone of agriculture
development; growth in the construction and energy industries; and growth in
neighbouring countries of Mozambique, Tanzania and Zambia which will increase
demand of Malawi products.

Just like the majority of enterprises in the economy, our business and operations are
susceptible to fluctuations in the countrys economic performance. Amongst, others
our operations will be affected in the following manner:

Fluctuating and depreciation of the Malawi Kwacha-The high costs and seasonal
availability of the Kwacha exposes our business to potential losses arising from
foreign claims
Freeze on budgetary support by development partners-A consequence for MASM
has been either increase in the incidence of member firm withdrawals or
reduction in the number of employees insured or inability to recruit new
members
High Inflation-This poses a challenge in tariff setting, pricing and generally our
stakeholder management

Despite the prevailing economic challenges, there are some opportunities that our
plan must take into account

A generally young population

An increasing middle income population
Improved communications and infrastructure
An underdeveloped insurance market
An underdeveloped insurance market
Low dependency rates
Morbidity rates
Proposed change in legislation

Regulatory and Supervisory Framework

The Registrar of Insurance Companies, published a bill in the course of the year,
which sets out the manner in which our industries will be regulated once the bill is
enacted. Elements of the Bill that are of immediate concern, and that need to be
taken into account in the development and implementation of this strategy, include:
The requirement to either self-administer or appoint an independent
administrator,
Obligations to comply with stringent licencing, supervisory and regulatory
requirements which amongst others, product offerings, and

3
 Proposed restrictions in investments that medical aid schemes can make.

Key Issues and Opportunities for improvement

Based on the prevailing market environment, the regulatory framework and our own
recent performance, for the 2016 2020 strategic plan period there are a number of
key opportunities for improvement that we have identified. These include:

1. BusinessGrowth

In the past planning period, we had projected the number of lives that we would
insure to grow at an annual rate of 10 per cent. The results, however show that we
have only been able to achieve a year-on-year average growth of 4.5 per cent.
There are a number of factors that have contributed to below par performance in as
far as growing membership is concerned

Our growth projections have traditionally not been underpinned by rigorous

market research and statistical analysis. This, coupled with our own weak
capacity to collect and analyse market, economic and statistical data has meant
that we have at best based our projections on intuitive assumptions.
We suffer high level of member attrition year-on-year, as evidenced by incidence
of negative growth in some years and the fact that despite registering a 4.5%
year-on-year growth over the period under review, actual growth over the five
year period is only 18% suggesting a total attrition 4.5 per cent in our
membership.
We have a very low dependency ratio.
Poor product offerings and inappropriate marketing response and strategies. Our
approach to product design does not take into account members needs as
evidenced by the fact that we do not engage with them in the product
development process.

To exploit the opportunities for improvement that we have identified, our key focus
in the 2016 2020 period will be to:

Revisit our marketing strategies from the open mass marketing approaches that
have not served us well so far to direct marketing strategies in the immediate
term. We will focus on increasing the dependents ratio among our existing
members and marketing to specific segments and professions in our market in
the immediate term before moving to recruiting and using agents for the mass
market in the later period of this strategic plan. Our main focus being to ensure
that our investments in member services bring about a reduction in recruitment
costs and the desired returns in investments that we have made.
Upgrade our product assessment and pricing models immediately by engaging
and using qualified actuaries.
Change our product development approaches by increasing the level of member
engagement in the process and allowing them options to select particular
benefits for corresponding levels of prices.
Review and align all our product and benefits offerings to the proposed new
legislation

4
2. Operations

For the 2016 2020 strategic plan period there are a number of key opportunities
for improvement in our operations, including:

Optimising our operating model in order to reduce costs but also improve our
service offerings to our members. We need to, amongst others, determine which
aspects of our processes in operations should be centralized or provided at
specific points at which we are represented,
Reviewing and optimize the claims process. In its current form, the process will
not sustain our business. The new IT system will no doubt help address some of
the inefficiencies, but in order to derive maximum benefit, we need to re-
engineer and optimize the whole claims process.
Revamping our fraud detection and management capabilities,
Improving our management of service providers, including tariff negotiations and
setting, and
Strengthening our case management and ensuring that we cover a considerable
number of cases than we are currently able to.

3. Financial Performance

Opportunities for improving our financial performance in the 2016 2020 period will
require that, amongst others we address the following:

Weak internal reporting processes on budgetary performance,

Low returns from our long term investments,
Lack of a risk management framework,
Weak reconciliation processes on member accounts which contributes to
customer dissatisfaction, and
Aligning our investments and investment policies to the requirements of the
proposed supervisory and regulatory regime.

4. Information Technology

We only acquired a new IT in the closing period of the last planning period and have
only commenced its implementation and migration from the old to the new system,
meaning we have implemented much of the previous strategy using the old system.
As a consequence much of the challenges that we identified in 2010 remain to this
day as evidenced by the key challenges of:

Poor system accessibility,

Very low system availability,
Weak IT security,
Poor and costly document management systems and processes, and
Weak contract and service provider management, among others.
To address these challenges, the 2016 2020 strategy will seek to fully exploit the
investment that the Society has made in the new IT system by introducing: web-

5
based member management services; offering IT based value added services to our
business; enhancing our IT security; and up skilling the IT capabilities of all staff in
MASM and most importantly the technical proficiency of staff with the IT
Department. Secondly, we will support our core business units: Commercial and
Operations, by ensuring that their optimized business processes are adequately
automated to reduce Societys costs of doing business and add value to our
members. Lastly we will strengthen our contract and project management
capabilities by introducing and enforcing service level agreements with all our
service providers.

5. Human Resources Management

We have made good progress with strengthening and modernizing our human
resources management process and systems over the past five years. However,
enhancing our performance management system and re-energizing our organization
culture remain key challenges that we have to overcome. While we have strengthen
our HR administration functions, we still need to do more to fully professionalize the
functions. During 2016 2020 strategic plan period our key focus will be on:

Improving staff performance by rolling out balanced scorecards to all positions in

the Society,
Developing and implementing competency development plans, individual
development plans and succession plans, and
Reducing and reigning in our staff and administration costs by reorganizing our
structure and aligning it to the reengineered and optimized processes
throughout our organization as well as in line with the requirements of the
proposed regulatory and supervisory framework.

6. Governance and Performance Management

Our key objective is to adhere and uphold highest standards of governance. In the
previous planning period we made good progress in strengthening our compliance
and internal audit functions. Monitoring our performance and strategy
implementation has however lagged behind. More also still needs to be done to
strengthen our corporate governance. We need to introduce and implement board
assessments and train our directors in corporate governance regularly. A clear
schedule of authorities also needs to be developed and adhered to. With regard to
internal audit, we need to:

Improve our internal audit processes by ensuring that we: conduct our audits per
plan and within cost; improve the reliance that our external auditors place on our
internal audit findings and reports; improving our ICT audit capabilities; and
capacitating our staff,
Reducing both the incidence and magnitude of fraud, and
Reducing the incidence and levels of avoidable and unauthorized expenditure.

6
Introduction
Medical Aid Society of Malawi (MASM) presents its strategic and business plan for the period
2016 2020. The plan includes:

Country context. Which provides an overview of Malawis recent and projected

economic performance; an assessment of the likely impact of the countrys recent
economic performance on our industry and specifically, our performance; and some key
social and demographic indicators affecting our industry.

MASMs overview. This section contains an overview of our institutional framework

and describes our mandate and assesses our own positioning in the market as well as
some of the emerging trends and issues that may impact on our operations, during the
life of this business plan.

Review of our performance in the 2011-2015 period. In this section, we review our
performance against targets set in the last strategic plan. We also analyse the challenges
and opportunities that exist in our business environment.

Our strategic issues and objectives.This section identifies key programme areas that
we must tackle during the next five financial years, in order to meet our objectives.

Action Plans. Our action plans for 2016 2020 are set out in this section. We also
identify the operational, financial and management plans that we need to put in place in
order to meet our strategic objectives. We recognise that we need to constantly review
our performanceagainst the targets that we have identified for ourselves in this plan. We
are also aware that we cannot afford to slacken our efforts to continuously assess trends
in our environment and make necessary adjustments to our plans, where necessary. We
therefore also identify key steps that we must take to continuously monitor and review
our performance.

7
Country Context

8
Political Context
The ruling Democratic Progressive Party (DPP) got into power after the 2014
elections which saw the late presidents brother, Professor Arthur Peter Mutharika
victorious with 51 Parliamentary seats. The election itself saw a large number of
independent candidates being voted into Parliament: as a bloc, they accounted for
52 seats in the 193 member house. Whereas this would have meant that policies
and bills proposed by the government are met with resistance from the opposition,
the tendency so far has been that a sizeable number of the independentssupport
the Government side. Additionally, there is a de facto coalition between the ruling
party and UDF, (which has 14 Parliamentarians), whose president is also a member
of cabinet. A robust opposition, led by the MCP still exists and has provided the
much needed oversight and balance and checks on the executive arm of
government effectively so far.

The next legislative and presidential elections are scheduled for 2019 and the key
issues at this contest which will determine the outcome of the election, is likely to
be turning around of the economy fortunes of the country and boosting the living
standards of the people. While there are likely to be some tensions as the election
period approaches, in the interim political stability is expected and no major
politically inspired policy shifts can be expected during the most of the
implementation period of this strategic and business plan.

Economic Context

Economic Performance in the Past 5 years

Prior to the 2011, the economic performance was promising, especially in 2008 and
2009 period when GDP rates were at 8.3% and 9% respectively. These growth rates
slackened in 2010 and 2011, to moderately high rates of 6.5% and 5.3%
respectively. Slow growth in 2010 was partly due to donor aid freeze due to
unsatisfactory macroeconomic policies being implemented at the time.As a
consequence, the country experienced acute shortage of foreign reserves, which led
to fuel shortages amongst other essential products. In our specific instance, this
period was characterised by sharp increase in our exposure to medical claims for
services rendered to our members outside of the country and financial
unsustainability of some our medical schemes that mainly relied on access to
foreign treatment and medical services.

In 2012, following the sudden death of the then ruling president, there was a shift in
political power from the then ruling Democratic Progressive Party (DPP) to the
Peoples Party (PP). In a bid to win back donor support and get the economy back on
track, the PP led government instituted a number of measures which resulted in,
amongst others:

Devaluation of the Malawi Kwacha by as much as 50% resulting in trading at

K250 to 1US$;
A change in exchange rate regime from floating to flexible regime, which lead to
further depreciation of the Kwacha;
The resumption of the IMFs programme which led to access to the Extended
Credit Facility (ECF) which led to the subsequent release of donor funds. In

9
 compliance with conditions of the ECF the country was obliged to implement
tight monetary policies which resulted in interest ratesadjustments and removal
of price controls for petroleum products, amongst others. These policy initiatives
were implemented against a backdrop of low foreign reserves, fuel shortages
and a high burden of fuel and maize subsidies.
A very low growth of 1.8% in 2012. The economic slowdown experienced in this
period resulted in increased instances of enterprise reorganisation and
downsizings, and outright closure in some cases, increased burdens of backlog of
payments to suppliers that suddenly doubled owing to the devaluation.

The policy initiatives implemented by the PP-led government brought back donor
confidence, who resumed budget support to the Malawi Government. The resultant
improvement in availability of foreign exchange spurred growth in the private
sector. All these factors combined led to significant recovery in economic
performance in the 2013 period as is evidenced in the summary of key economic
indicators over the period under review in the table below.

Unfortunately this recovery could not be sustained. The discovery of massive

misappropriation of public funds, dubbed cash gate destroyed the confidence that
donors had in government procurement and accounting systems as well as its
commitment to tackle fraud and corruption. The development partners responded
to this discovery by suspending budgetary support, immediately throwing the
countrys economic performance back in turmoil as evidenced by scarcity of foreign
exchange, an increase in inflation and collapse of social services, amongst others.

Table 1 Summary Economic Performance

201 201 2012 2013 2014 2015E 2016E
0 1
RGDP % 7.9 4.3 1.8 6.1 5.7 3 5.3

Nominal GDP(billions of 812 881 1057 1415 1809 2224 2893

Kwacha)
Inflation (av. %) 7.4 7.6 21.4 27.3 23.8 16.5 12

Lending Rate (av. %) 24.7 23.8 32.0 36.0 37.0 37.0 37.0

MWK:USD(middle rates) 150. 163. 311 384 431 538 540

8 7

Impact of Economic Performance on Our Business and Operations

Just like the majority of enterprises in the economy, our business and operations are
susceptible to fluctuations in the countrys economic performance. Amongst, others
our operations are affected in the following manner:

1 Fluctuating and The high costs and seasonal availability of the

depreciation of the Kwacha exposes our business to potential
Malawi Kwacha losses arising from foreign claims. In addition it
makes it difficult for us to develop offerings for
the high end of the market with easily

10
 accessible foreign treatment options. We also
experience pressures from service providers in
so far as tariff setting is concerned.

The continuing freeze of budgetary support by

the development partners has resulted in
contraction in the economy with some business
Freeze on budgetary operating below capacity while others have
2 support by development closed altogether. A consequence for MASM
partners has been either increase in the incidence of
member firm withdrawals or reduction in the
number of employees insured or inability to
recruit new members.
This poses a challenge in tariff setting, pricing
and generally our stakeholder management.
Rising inflation generally requires usto revise
our membership subscriptions upwards, which
though generally not sensitive to price
3 High Inflation increases, has resulted in members reviewing
thenumber of dependents insured under their
various medical schemes. With regard to
service providers, we face increased demands
for increase tariffs which in turn affects our
contributions to claims ratio significantly.

Prospects for the Immediate and Medium Term

Table 2 below summarises projected economic performance in the immediate to
medium term.

Table 2 Projected Economic Performance

2015E 2016E 2017E 2018E
RGDP % 3.0 5.7 6.0 6.2
Nominal GDP(billions of Kwacha) 2224 2556 2893 3274
Inflation (av. %) 16.5 12 7.7 7.4
Lending Rate (av. %) 42.0 32.5 24.5 23.9
MWK:USD(average) 538 540 583 608

The economy is expected to experience a slowdown in 2015 and GDP growth has
recently been revised downwards from GDP of 5.5% to 3% by both the Government
and IMF.Economic performance is expected to recover in 2016 and subsequent
years on the backbone of agriculture development; growth in the construction and
energy industries; and growth in neighbouring countries of Mozambique, Tanzania
and Zambia which will increase demand of Malawi products.

11
Inflation is expected to ease to single digits in 2016 and forex reserves to stabilise
at 3 months import cover. There still exists a potential in mining and this is
expected to contribute to economic recovery.

Benefits arising from public private partnerships are also expected to contribute to
economic recovery. The Government is fast tracking improvements in the energy
sector. There are plans that will see the electricity supplier, ESCOM, unbundled into
two entities; one for electricity generation and the other for transmission and
distribution of power. This restructuring is expected to encourage other market
players in power generation as they can sell to the transmission and distribution
companies, thereby unlocking a key bottle neck in the current power purchase and
supply agreements.

It is unlikely though that budgetary support from donors will come anytime soon, or
at all. Government recognises this and seems committed to move proceed on its
path of moving away from donor reliance in terms of budget support and instead
rely on foreign direct investment and domestic resources as a means of financing its
operations. It is therefore likely that in the immediate to medium term, pressure on
the financing of social services, including public health facilities will continue thus
putting pressure on privately owned health facilities, and forcing our members to
obtain even those basic services that they could have obtained from public health
facilities from private sector providers at a premium. Governments plans to
construct modern and high-tech cancer facilities in both Lilongwe and Blantyre in
the medium term should help ease the burden of covering ailments related to
cancer that can be substantial and currently, often only available in the form of
foreign treatment. On the supply side, the low interest of operators to enter the
medical services market and establish more top end medical facilities in the country
remains a source of concern. Lack of competition in the market makes it more
challenging for us to negotiate tariffs with the few top end providers due to their
strong collusive power, while limited supply, means that in the immediate to
medium term we cannot avoid foreign referrals for some ailments suffered by our
members. Health sector reforms that include possible introduction of user fees in
public hospitals present a possible opportunity for the medical insurance to cover
those sections of the market that have traditionally relied on free health and
medical care. On the supply side, it could also encourage establishment of privately
owned health facilities in the peri-urban areas, therefore provide additional
recruitment areas other than the main urban centres for our industry.

The implementation of the national identity card scheme, when completed, is also
likely to help our industry reduce the costs of doing business through reduction in
fraud that is perpetrated due to weak identification systems of individuals.

Malawis Demographic Profile

Malawis total population is currently projected at just over 16million, of which:

46.9 per cent is below the age of 14 years,

20.2 per cent is between 15 and 24 years old,
27.1 per cent is between 25 and 54 years old, and
5.8 per cent is more than 55 years old.

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Generally the countrys demographics have been heavily influenced by the effects
of HIV/AIDS which afflicted the country quite severely in the late eighties through to
early 2000 and their attendant effects of higher infant mortality, higher death rates
and changes in the distribution of population by age and sex than would have
otherwise been expected. Effects of HIV/AIDS, low income levels and poverty have
left the country with a high dependency ratio of 93.3% (youth: 87% and elderly:
6.3%) and as high a potential support ratio of 16. 2011 figures estimated the level
of urbanisation to be at 15.7% of the total population but growing at an annual rate
of 4.2%. The countrys infant mortality rate is at 48.01 deaths per every 1000 live
births while total life expectancy at birth is estimated at 59.99.

The demographic factors present some challenges to our industry, notably:

1 A generally young Of Malawis population of 16million,

population over 65% is below the age of 25. This
provides us the medical aid industry
with good prospects to increase our
membership amongst this young
lucrative segment of the market by
increasing the number of lives insured -
beneficiaries. As MASM, we have not
exploited this market potential as we
would have loved. On the contrary,
since our last strategic and business
plan, our membership profile has
become more aged despite the changes
in the age profile of our countrys
population.
2 An increasing middle Generally the proportion of the
income population countrys income in the middle income
bracket is on the increase as is
evidenced by changes in consumptions
patterns, urban mobility and increase in
the numbers of increasing middle aged
entrepreneurs in the country. This
segment of the population should
provide us with good prospects for
member recruitment, even where such
potential members are not in formal
employment.
3 Improved Improved communication and
communications and technology infrastructure makes it easy
infrastructure for us to reach our potential and current
markets more effectively and cheaply;
has potential to reduce our operating
costs and improve access to our service

13
providers. Combined all these should
help make our services more accessible
and inexpensive.

14
4 An underdeveloped The level of uptake of insurance
insurance market products in Malawi, including health
insurance remains very low. This is in
itself informs us that there remains
huge potential to cultivate and benefit
from the huge unmet demand.
5 Uncertain future of The pending new legislation regulating
closed schemes our industry will place more and
additional administration costs on
closed schemes which could force them
to revisit their models and either seek to
partner with organisation such as ours
to administer their schemes or indeed
wind up and close the schemes
altogether.
6 High dependency rates Malawis demographics are
characterised by a rather high and
concerning dependency ratio. For our
industry this means that increasing
numbers of individual principal
members is likely to remain a challenge
in the medium term. Focus would
perhaps have to be on getting existing
members increase the number of our
beneficiaries.
7 Morbidity rates High morbidity rates and mortality rates
though present a challenge for our
industry in terms of the risk that is
carried in insuring existing and potential
members. Pricing medical insurance
products properly and accurately is
therefore critical to ensure that medical
insurance providers such as ourselves
remain sustainable.

Regulatory Environment
The Registrar of Insurance Companies, published a bill in the course of the year,
which sets out the manner in which our industries will be regulated once the bill is
enacted. Elements of the Bill that are of immediate concern include:

1 Appointment of The Bill, in its current form, requires an

Administrator or Self appointment and separation of an
Administration Administrator from management of the
scheme itself. Where a medical aid
scheme elects to combine the functions,
specific approval must be sought from

15
 the regulator. Providers in the industry
will therefore be obliged to decide
whether they want to combine the two
roles and therefore effectively maintain
their current operating model and not
take advantage of the proposed
legislation to make changes to their
operating model by separating the two
functions. If enacted in its current form,
the Bill provides an opportunity to those
entities that may only be interested in
providing administration services to
enter the market, primarily targeting
the closed schemes as an initial point of
entry. This effectively brings in a
different kind of competition to what
has historically obtained in the industry.
Compliance with The regulator will require all licenced
licencing conditions medical aid schemes to comply will all
requirements, including liquidity and
product offerings, amongst others. Thus,
once enacted, operators in the industry
will require strong financial health and
levels of capitalisation in order to
ensure that they meet thresholds for
compliance. Product offerings and some
ailments and conditions allowable for
cover, will also be regulated and no
longer left to the whims of individual
schemes.
3 Limitations on The proposed regulator imposes
Investments restrictions on the nature of
investments that a medical aid scheme
can make, primarily to discourage
medical aid insurance companies from
tying funds into investments that make
funds unavailable for insurance cover
bought by members.

16
Our Organisation & Market
Position

17
18
Our History
MASM is an open scheme catering for the society in general. We were founded as an
independent mutual benefit medical aid society in 1983 when we took over the
operations of the Commercial and Industrial Workers Medical Aid (CIMAS) of
Zimbabwe in Malawi.

MASM is registered as a not-for-profit organisation under the Trustees Incorporation

Act (Chapter 5:03 of the Laws of Malawi). In line with its Trust Deed, all surpluses
earned by the Society are not distributable. Rather they are kept in reserve for the
benefit of members. Membership growth in the early years was rather slow. In 2000
the Society only covered 27,000 lives. In the past decade membership has grown
and as of October, 2015 we covered 123,000 lives.

Our Membership Profile

Geographical Profile

We have members across all the 28 districts in Malawi. However our membership is
concentrated in the mainly urban areas:

Blantyre - 54%,
Lilongwe - 34%, and
Mzimba - 4%

This represents 92% of all lives assured. Table 3 below, summarises the regional
distribution of our current membership.

Number of Lives
Region %age across regions
assured
Southern 73,124 59%
Central 44,344 36%
Northern 5,695 5%
Total 123,163 100%

We insure the above lives through our three schemes, and the distribution of lives
insured across our offerings is as below.

Total Lives Insured As of October 2015

VIP EXE ECO

Total Lives Insured 34,631 59,428 29,104

Of which:
Southern 52% 64% 66%
Central 44% 32% 29%
Northern 4% 4% 5%

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 TOTAL 100% 100% 100%

Of the 123,163 lives that we insure, 50,607 are principal members with remainder
of 72,556 being dependents, representing a dependents ratio of 1.4. Our
membership is highly concentrated in the corporate sector which accounts for 92%
of membership base, with a paltry 8% comprising of private members/individuals.
This level of concentration demonstrates the degree to which medical insurance is
still viewed as a perk in our market as opposed to a necessity that individuals would
want to invest their money in. This is reflected in a lot of data and research that has
been concluded in Malawi that demonstrate a very low level of inclusiveness in so
far as financial and insurance products are concerned.

At 48 per cent of our total membership, the Executive Scheme is our biggest
offering. Average annual contribution per member in this scheme in 2015 was at
K69, 100 as opposed to the VIP Scheme which accounts for 28% of our total
membership. At K4.46billion contribution income in 2015, the VIP Scheme brings in
the highest contribution income though (Executive: K4.26billion and Econoplan:
K0.58billion). Average contribution income per member for VIP and Econoplan
schemes in 2015 stood at K132, 621 and K20, 057 respectively. Despite the high
variation in prices among the schemes, in 2015 we noted a remarkable increase in
new members joining our flagship VIP scheme, 13,113 new members as opposed to
7,516 and 6,737 for Executive and Econoplan Schemes respectively. Attrition during
the five year period stood at 4.5%. The high attrition rates are reflective of the
inherent risk that we carry in over-relying on big corporate clients as a withdrawal of
one big account effectively means withdrawal of a high number of lives insured.

Age Profile
A breakdown of our members age profile and dependency ratios across different
age groups is summarised below:

Age Total
Brack Lives Dependenc
et Insured y Ratio
Princip Depende
al nts

0 - 20 45,026
21 -
30 22,683 12,249 30,964 2.5
31 -
40 28,333 18,983 23,378 1.2
41 -
50 15,189 10,784 10,433 1.0

> 50 11,932 8,591 7,781 0.9

123,163 50,607 72,556

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Our membership base is predominantly young: lives insured below the age of 40
years account for 77.9% of the total lives we insured in 2015. However 54,342 of
these lives,(or 56% of all lives under the age of 40 years) are beneficiaries. The
dependency ratio of our membership profile is also very low overall if compared to
the national average and specifically amongst the 21 50 age group. Dependency
ratio in the 21 30 years old age group is the highest among our members at 2.5,
declining to 1.2 in the 31 40 tears age bracket and to 1 amongst those of our
members aged 41 and above.

Our Market Positioning and Competition

As of April 2015, we remained the dominant and biggest open medical aid scheme
operating in Malawi, with a market share of 90 per cent among open schemes.Our
competitors: Horizon Health, at 6.02 percent; and Metropolitan with, 4.28% share
the rest of the market. Our competitors offering are not very different from our own
and they offer products targeting the low (similar to Econoplan), medium (similar to
Executive) and top end of the market (similar to our VIP). The differentiating factor
among the providers in the market seems to mainly be the range of benefits offered
by the different medical schemes and accessibility of service providers.

Pricing does not appear to be a key differentiating factor in so far as choice by

consumers is concerned as to which medical aid scheme to subscribe to as is
demonstrated by the monthly membership subscriptions below.

Price Comparison
14,000

12,000

10,000

8,000
Price
6,000

4,000

2,000

0
Low Medium High

In fact, our price offering for the Econoplan scheme is below that offered by any of
our competitors; within average in the Executive Scheme and below average at the
top end of the market.

With regard to annual benefits limit, our offerings exceed those offered by our
competition, with the exception of Metropolitan, which beats us at the top end of
the market as demonstrated below. This could be a deliberate strategy on the part
of Metropolitan to attract this lucrative segment of the market in terms of

21
contribution income. Nothing much separates us from our competitors in terms of
territorial coverage in so far as availability is concerned. The differentiating factor
being that in the case of our competitors schemes this is optional.

Annual Limit
14,000,000

12,000,000

10,000,000

8,000,000
Price
6,000,000

4,000,000

2,000,000

0
Low Medium High

We cognisant of the fact restricting market share analysis to open schemes, leaves
out a significant portion of the market that is serviced by restricted schemes.
Available market information suggests that as many as 54,196 lives are insured by
these restricted schemes which are predominantly operated by statutory
organisations in the country. Adjusting the computation of market share to take
account of the segment covered by the closed schemes, produces interesting
statistics as summarised below.

Closed
MAS Metropolit Horizon
Schem Industry
M an Health
es
December 2014 123,2
6,919 7,392 54,196 191,785
Membership 78
September 2015 123,1
6,764 8,474 54,196 192,597
Membership 63
Growth -115 -155 1,082 0 812
% Growth 0% -2% 15% 0% 0%
Market Share 64% 4% 4% 28%

As can be noted, our overall market share declines from 90 per cent to 64 percent.
While we maintain our market leadership position, our dominance declines
significantly. It would appear that closed schemes remain preferred to their
members for a variety of reasons, including:

Lower monthly contributions paid i.e. in most instances these schemes are
heavily subsidised by the employer,

22
 Superior benefits structure:
o Lower percentage of shortfalls than demanded by the open schemes.
o Availability of foreign based treatment to senior members of staff and at a
more discretionary basis.
o Convenience and ease of administration, and
o Availability of exceptions in special circumstances.

23
Our Recent Performance

24
Our Performance 2011 - 2015
As has been noted earlier, Malawis economic performance over the past five years
has been mixed and volatile. This has had an impact on our business and
performance against our previous strategy. In this section, we provide an overview
of our performance and highlight some of the key lessons that we have learnt which
should inform our 2016 2020 Strategic and Business Plan.

Membership Growth
Our membership for 2010 stood at 104,254 lives assured. Audited results for year
ended December, 2014 show that the number of lives assured had grown to
123,278, representing an 18 per cent growth over the five year period. We had
projected the number of lives that we insure to grow at an annual rate of 10 per
cent. The results, howevershow that we have on been able to achieve a year-on-
year average growth of 4.5 per cent.

Membership Analysis
180000 0.25
160000 20% 0.2
140000 0.15
120000 Membership
9% 0.1
100000 Planned membership
0.05 Actual % growth
80000
1%
0
60000
40000 -0.05

20000 -0.1
-11%
0 -0.15
2010 2011 2012 2013 2014

We registered a high growth rate of 20 per cent in 2011, beating our own target of
10 per cent for the year. We were however unable to sustain this growth rate in
subsequent years: we experienced a negative growth of 11 percent in 2012; before
registering a nine per cent growth in 2013; and one per cent in 2014. Considered
against overall market share though, it can be argued that overall our growth has
been consistent with the level of market growth as demonstrated by the fact that
we have maintained our dominant market position during the period under review.

The vagaries of the economic environment aside, there are a number of factors that
could have contributed to our below par performance:

First, our growth projections have traditionally, including in the period under
review, not really been underpinned by rigorous market research and
statistical analysis. Our membership database and system has until now not

25
 been very useful in so far as helping us extract and analyse data in order to
understand certain dynamics of our market and membership needs. This,
coupled with our own weak capacity to collect and analyse market, economic
and statistical data has meant that we have at best based our projections on
intuitive assumptions. We recognise that this we cannot continue operating in
this manner and succeed as a business. The recent acquisition of a new IT
system will provide the much needed enabler to help us overcome this
weakness. However, to fully exploit the potential of the system will need up
skilling our people both in our Commercial and IT Departments to a level that
will enable us benefit from the investment made. If we are to realise
immediate gains, which we sorely need, consideration should be given to
buying in some of these critical skills.
Second, we suffer high level of member attrition year-on-year, as evidenced
by incidence of negative growth in some years and the fact that despite
registering a 4.5% year-on-year growth over the period under review, actual
growth over the five year period is only 18% suggesting a total attrition 4.5
per cent in our membership. To maintain positive growth in the number of
lives that we insure will require us to address member retention as a priority.
We can only achieve this by optimising our service delivery and operating
models. After thirty two years of existence, our service delivery and operating
models are still based on those that we inherited from our successor
organisation, CIMAS. In the past planning period we have operated in a
business as usual manner. We have not reviewed our operating model and
taken steps to optimize our business processes as was envisaged under the
previous strategic plan. This, despite the obvious changes socio-economic,
technology, regulatory etc. in our environment. We need to take another
look at our service delivery and operating models in order to reposition
ourselves in the market and take advantage of the opportunities that the
pending regulatory framework will bring to our industry as well as respond to
its challenges. We therefore commit ourselves to: (a) revamp our service
delivery model; and (b) review and optimise our membership services during
the 2016 2020 period.
Third, and aligned to weak understanding of our market and member needs,
is a combination of poor product offerings and inappropriate marketing
response and strategies. Our approach to product design does not take into
account members needs as evidenced by the fact that we do engage with
them in the process. As market leaders we have been somewhat fortunate in
that the new entrants into the market have elected to offer products that are
more or less similar to our own instead of taking a more aggressive approach.
We have however not been able to convince the closed schemes switch to us
for reasons discussed earlier. We realise that we cannot continue to ride our
luck. As our markets and the needs of our markets continue being
sophisticated we need to respond to the market by allowing our members to
customise their insurance benefits to their specific needs and circumstances.
This represents a radical departure from the manner in which we have been
developing our products and may require that we seek for technical support
elsewhere to help with both market research, product design and pricing. Our
idea though is to offer a basic scheme as a foundation that our members can
then customise their needs by selecting a range of options to suit their needs
in effect giving them the power to develop a product that meets their

26
needs. Whereas the investment made in new IT system and migration to web
based member services, will no doubt provide the much needed enabling
tools and systems, assessing economic viability and pricing of such products
will require actuarial skills do not currently have in-house and can probably
not justify retaining on a permanent basis.

Our marketing strategies and responses do not take cognisance of the socio-
demographic realities of our market. We have, to date, relied on open and
mass marketing strategies that have not provided us with the results that
we need to grow our business. We have done very little to market within our
existing membership base in order to grow the number of lives assured.
Statistics highlighted earlier show that we have a very low dependence ratio
relative that obtaining in the country and indeed average family size in the 24
50 age categories for example. While we have identified the need for
developing products to suit the younger and student sections of our
population, we have failed to realise that this potential market is likely to
become dependent members as opposed to principal members. The target to
market to and the strategies to use therefore ought to be different from what
we have traditionally used, suggesting a switch to more targeted and direct
marketing approach which should possibly be supported by incentives to
those of our members with higher dependency ratios. Deepening the
dependence ratio can also have the complementary effect of helping us fight
and reduce fraud. The low dependence ratios, against higher average family
sizes, could be indicative of possibilities that some of our members use one
dependants cover to obtain medical services for other members of the
family.

To address the challenges, our immediate focus in the 2016 2020 period will
be to:

a. Revisit our marketing strategies from the open mass marketing

approaches that have not served us well so far to direct marketing
strategies in the immediate term. We will focus on increasing the
dependents ratio among our existing members and marketing to
specific segments and professions in our market in the immediate term
before moving to recruiting and using agents for the mass market in
the later period of this strategic plan. Our main focus being to ensure
that our investments in in member recruitment costs bring about
desired financial returns.
b. We will upgrade our product assessment and pricing models
immediately by engaging and using qualified actuaries.
c. We will change our product development approaches by increasing the
level of member engagement in the process and allowing them options
to select particular benefits for corresponding levels of prices.
d. Review and align all our product and benefits offerings to the proposed
new legislation
e. Upscale the use of data and analytics in our market analysis and
planning to ensure that we are able to project the future of our
business with reasonable degrees of certainty that what we have come
to be used to in the past.

27
Claims
One of the key influences on our performance over the past five years has been our
claims experience. Management of claims is extremely important as it determines
the sustainability of the Society. At the end of 2010 our claims bill was just over
K2billion. This has risen to K5.4billion as of the end of 2014. The graph below
demonstrates the movement of our claims bill over the past five years.

We have managed to achieve our targeted claims loss ratio of 80%, and in some
instances have actually beaten the target.Yearon-year upward adjustments to
member contributions have helped us meet this target despite the increases in
tariffs from our service providers.

In 2015 we processed a total of 615,852 representing an average of five claims per

each insured life at an average claim processing cost of K544.15.

Claims
6,000,000 0.45

0.4
5,000,000
0.35

4,000,000 0.3

0.25
3,000,000
0.2

2,000,000 0.15

0.1
1,000,000
0.05

0 0
2010 2011 2012 2013 2014

Claims % Change

Claims and claim management remains a key challenge to our business: at current
levels, our processing costs are way too high; it affects our value proposition and
competitive positioning; affects our customers experience; and has the potential to
distinguish us from others in our market environment.

Our ratio of claims paid out to contributions received is also a cause for concern. In
2014 total claims bill exceeded contributions (see graph below). As is normal in our

28
industry, total claim paid out in the period under review have been much lower than
the actual claims bill. This could however also point to the fact that our members
are under insured (at least in some categories). Further, it also brings into question
our financial health as we have to carry sizeable contingent liabilities in
unprocessed or declined claims year - on - year.

Our claims processes still need to be optimized. Despite investments made in

information technology, the need to re-engineer and optimize our back office
operations remains. Indeed gaining efficiencies in this area is of fundamental
importance and key to our ability to become a world-class medical aid scheme.

Fraud Statistics
During the 2011 2015 period, statistics suggest that there has been a decline in
member fraud cases showing a declining trend. We cannot place too much reliance
on these figures as it could well be that some incidence of fraud remain
unidentified. As we have pointed out elsewhere, the mere fact that our dependence
ratio is lower than the average family size should cause us some concern. Our
capacity and processes for tracking and identifying fraud themselves are also weak
and need to be modernized by introducing such approaches as risk profiling of both
members and providers. We also need to ensure that the integrity of our own staff
cannot be questioned at any point in time. Importantly our approaches should also
be cost effective.

Analysis of Claims & Contributions

900,000,000

800,000,000

700,000,000

600,000,000
CLAIMS BILL
500,000,000 CONTRIBUTIONS
CLAIMS PAID
400,000,000

300,000,000

200,000,000

100,000,000

-
2011 2012 2013 2014

Case Management
Our capacity for case management is very limited mainly due to understaffing and
our existing operating model which obliges us to undertake this function in-house,
when it is possible to outsource the function. It is imperative that we increase

29
coverage of this important function in order to reduce our rather high non-health
care costs.

Tariff Management
In the period under review we have continued to experience challenges with
negotiating tariffs with our providers. Depreciation of the Malawi Kwacha and
spiraling costs have meant that service providers have demanded tariffs that are
higher than the rates of increase in member contributions. This puts a strain on the
range of benefits that we are able to offer to our members, and has the potential of
affecting our value proposition negatively.

For the 2016 2020 strategic plan period there are a number of key opportunities
for improvement in our operations, including:

Optimising our operating model in order to reduce costs but also improve our
service offerings to our members. We need to, amongst others, determine
which aspects of our processes in operations should be centralized or
provided at specific points at which we are represented,
Review and optimize the claims process. In its current form, the process will
not sustain our business. The new IT system will no doubt help address some
of the inefficiencies but in order to derive maximum benefit, we need to re-
engineer and optimize the whole claims process. Merely automating the
current process will not bring us the benefits that we need,
Revamping our fraud detection and management capabilities, and
Strengthen our case management and ensuring that we cover a considerable
number of cases than we are currently able to.

Financial Results
We managed to triple our contribution revenue during the period under review.
Given that we did not meet our targets for membership growth during the same
period, we have only been able to grow our revenue due to upward adjustments in
members contributions. While we had projected that our members contributions
would be adjusted by 15 per cent in 2010 and 12 per cent in subsequent years of
the previous strategic plan, members contributions have been adjusted by as much
as 163 per centcumulatively as opposed to 63 per cent which was in our plan.

Contribution Income

30
 Contribution Income
8,000,000 0.45

7,000,000 39% 0.4

36%
0.35
6,000,000
0.3
5,000,000
25% 0.25
24%
4,000,000
0.2
3,000,000
0.15
2,000,000
0.1

1,000,000 0.05

- 0% 0
2010 2011 2012 2013 2014

Actual Contribution % Change of Actual

Our non-health care expenses, (administration fees, managed care costs, bad debts
and reinsurance costs) stood at 21 per cent in 2015 which is double the industry
norm of 10 per cent. Obviously these put pressure on our financial performance. On
the investments side we have done very well in so far as achieving desired returns
on short-term investments. Our long term investments remain a source of concern
though as they continue to give us negative returns. We had planned to review and
develop exit strategies from a number of our investments during the 2010 2015
period, but are yet to do this.

Solvency ratio
We had set out to achieve solvency ratio (net assets/contribution revenue) of 25%
which is the acceptable ratio in the medical insurance industry. Our solvency ratio in
2010 was 11% and this improved to 20% in 2014. Though we have made good
progress, the ratio remains below the target that we set for ourselves. Deliberate
action plans are required to improve this rate by growing our net assets through
management of liabilities and improvement in our asset base by ensuring a positive
return on our investments.

The Society has achieved surpluses in the years under review, moving from a net
deficit of K23 million to a net surplus of MWK573 million in 2014.

31
 Contributions Adjustment
60%

50%

40% 40%

30%
26% 25%
20% 21%
17%

10%

0%
2011 2012 2013 2014 2015

Executive VIP EconoPlan Average

In summary, a number of key issues and opportunities for improving our

financial performance in the 2016 2020 period is as summarized below.

Key Issues
Weak internal reporting structure on budgetary performance
Low return on long term investment
Good
Key returns onlyOpportunities
Improvement registered on short term investments
Lack of a risk management framework
Slow updates on member accounts
Weak management
Benchmark reportingprocesses
framework to best standards
Non alignment of investment
Strengthen financial and statutory reporting
policies and practices to the proposed new
legislation
Strengthen budget implementation and management (including budget
preparation)
Return member financial Value
Develop a risk management framework
Improve management processes
Align investment policies and procedures to proposed new legislation
Develop and implement roadmap for divestiture from non-allowable or
non-performing investments

Information Technology
We only acquired a new IT in the closing period of the last planning period and have
only commenced its implementation and migration from the old to the new system,
meaning we have implemented much of the previous strategy using the old system.

32
As a consequence much of the challenges that we identified in 2010 remain to this
day as evidenced by the key challenges and opportunities for 2016 2020 below.

Key Issues

Weak system accessibility

Low system availability
Low IT staff Capacity
Weak IT security
Poor document management
Manual data processing
Weak contract management capability

Key Improvement Opportunities

Exploit full potential of new IT System

Introduce member web services
Offer Value added services to the business
Provide IT security
Training to staff on basic computer skills
Technical training to capacitate IT staff
Streamline, optimise and automate business processes in core
business divisions (commercial and operations),
Implement and adhere to internal and external service level
agreements
Includes strengthening contract management
Reduce costs
Demonstrate reduction in unit processing costs as a result
of automation.

Human Resources Management

We have made good progress with strengthening and modernizing our human
resources management process and systems over the past five years. However,
enhancing our performance management system and re-energizing our organization

33
culture remain key challenges that we have to overcome. While we have strengthen
our HR administration functions, we still need to do more to fully professionalize the
functions. Key issues and opportunities identified for the 2016 2020 strategic plan
are as follows.

Key Issues

Weak performance management system

Non-implementation and roll out of the Balance Score Card
(BSC) performance management system
Lack of succession plans
Underutilized competency development plans
High administration costs
Non professionalised human resources management function
Function still in transitory state from human resources
administration to management.

Key Improvement Opportunities

Improve staff performance

Implement and roll out BSC
Introduce and implement performance management tools
Develop and implement:
Competency development plans
Individual development plans
Succession plans
Reduce and reign in staff and administration costs
Reorganise and restructure in line with requirements of new
proposed legislation

Governance and Performance Management

The objective of this pillar was to adhere and uphold highest standards of
governance.In the period under review, we have made good progress in
strengthening our compliance and internal audit functions. Monitoring our
performance and strategy implementation has however lagged behind. More also

34
still needs to be done to strengthen our corporate governance. We need to
introduce and implement board assessments and train our directors in corporate
governance regularly. A clear schedule of authorities also needs to be developed
and adhered to

Audit

Key Issues

Inefficient internal audit processes

Weak follow through of audit recommendations
No staff capacity on IT audit assurance
Low focus on high business risks
Weak capacity to detect fraud and avoidable expenditure
Key Improvement Opportunities
Audit process Improvement
Conduct audits as per time and cost
Capacitate audit staff with skills
Outsource IT audits
Increase reliance by external auditors on internal audit findings
Reduce incidence and magnitude of fraud
Reduce incidence and levels of avoidable expenditure

Our Strengths, Weaknesses, Opportunities and Threats

Our strengths, weaknesses, opportunities and threats are summarised in the table
below

Strengths Weaknesses

Strong goodwill High levels of member attrition low

Well balanced board
Respectable organisation
Strong market presence
Solid establishment framework
Solid short term investment returns
Sound financial management
Well spread network of service providers
retention rates
Weak understanding of our market and
member needs
Low member dependency ratio
An unbalanced management team
High claim processing costs
High member recruitment costs
Weak budgetary performance monitoring and
tracking
Weak performance management framework
Lack of a risk management framework
Underdeveloped internal audit processes
Low uptake of IT systems and platforms
Lack of weak of data and metrics in pricing
and managerial decision making

35
 Weak IT security
High processing costs, error rates, rework
rates
Poor and costly document management
processes
Opportunities Threats

Generally young population Fluctuating and depreciation of the Malawi

An increasing middle income population Kwacha
Improved communications and Freeze on budgetary support by
infrastructure development partners
An underdeveloped insurance market Unstable economic environment
Proposed supervisory and regulatory Weak case management processes
framework Non- compliance and weak enforcement
Investment in new IT system of internal and external service level
Long history and entrenched market agreements
position Proposed new regulatory and supervisory
Strong brand framework
Low member dependency ratio Low member satisfaction poor member
services
High Morbidity rates
Fraud
Closed schemes
Weak tariff management

36
2016 2020 Strategic Plan

37
Our 2016 2020 Strategic Plan

Our Vision, Mission & Core Values

Our Vision

To be the ultimate healthcare solution at affordable and cost-

effective rates

Our Mission

To (i) provide affordable access to quality health care solutions to our members
at all times (ii) maintain strong financial base (iii) train our staff and service
providers in the pertinent aspects of healthcare and develop them to full
potential so that professionalism is maintained in the delivery of our
services ......

Our Values

a. Trust

b. Integrity

c. Confidentiality

d. Honesty

38
Initiatives and Action Plans

39
Strategic Initiative
Strategic Pillar One: Business Growth
Strengthen member retention
Improve dependency ratio
Recruit new members
Action Plans Period Performance Measures
1. Review and align products to member 2016 - Reduce attrition rate from
needs and 2020 4.5% to 2%
2. Enforce service level agreements with 2016 - SLAs in place and reviewed
service providers to ensure MASMs 2020 annually
member needs are protected
3. Develop web-based platform for 2016 Platform developed and
members to select benefits that meet offering choices in place by
their profile and needs July 2016
4. Introduce and offer value added 2016 Number of value added
services and benefits with the services introduced
parameters of regulatory framework
5. Improve members product knowledge 2016 - Member educational material
and benefits structure 2020 disseminated
1. Design and run targeted campaigns for 2016 Average increase in
existing members 2020 dependency ratio to 3
%age increase in
contribution income
directly attributable to the
initiative
2. Introduce and implement promotional 2016 %age increase/(decrease) in
incentives for members to increase average cost of member
number of dependents recruitment
3. Run targeted marketing and 2016 - Number of members
recruitment campaigns targeting 2020 recruited
dependents and their guardian
1. Targeted recruitment campaigns 2016 5% average annual
among professional and member growth of new members
associations such as SOCAM, Law recruited
Society of Malawi, ECAMA etc. %age increase in
contribution income
directly attributable to
initiative
Market Share (Open
schemes)
40
Strategic Initiative
Strategic Pillar Two: Improve Member Experience and Satisfaction
Improve member services
Ensure quality service delivery by
providers
Action Plans Period Performance Measures
2. Undertake market research into needs 2016 Survey conducted
and price sensitivity of health products
for the young and student market
(below 25 years of age)
3. Develop and exploit new platforms for 2017 Platforms developed and
marketing and member recruitment level of uptake
such as M-Commerce, mobile Recruitment costs per
recruitment campaigns, social media, member (from new
partnerships with mobile telephony platforms)
providers etc.
1. Automate member services and 2016 %age of automation of all
provide web based access to members member service process
2. Review, streamline and optimize all 2016 %age reduction in member
member services processes services costs
3. Establish a Call Center 2017 %age reduction in customer
complaints
4. Develop and implement a members 2017 Charter in place
service charter
5. Increase access and proximity to 2018 %age increase in points of
member services representation
1. Review service level agreements with 2016 - %age completion rate - SLAs
all service providers and ensure 2020 in place and renewed
minimum standards are set and annually
adhered to
2. Implement signage on benefits 2017 %age completion rate
structure, products, members rights
etc. at providers facilities
3. Undertake periodic audits on service 2016 %age of facilities audited and
providers to enforce compliance with 2020 completion rate against plan
agreed to standards and SLAs
4. Strengthen quality assurance 2016 - %age achievement against
2020 quality assurance plan
41
Strategic Initiative Action Plans Period Performance Measures

Improve approvals and claim 1. Streamline approvals process by 2017 Reduction in turnaround time
processing transferring some functions to Call for approvals
Centre
2. Review and optimize claims processing 2016 %age reduction in claim
and approvals process processing and approvals
cost
Reduction in error rates
and reworks
Reduction on turnaround
time for claims processing
Reduction in fraud

Strategic Pillar Three: Efficiency and Process Optimisation

Modernise and streamline systems, 1. Undertake an organization wide 2016 Organisation-wide process
processes and procedures to business process review and reviewed and optimized by
improve efficiency and operational optimisation August, 2016
effectiveness
2. Develop business case for optimizing 2016 Business case developed
key processes and benefits realization and tracked
tracking framework Performance against
benefits realization
3. Optimize key processes Process improvements
Turnaround time
Reduction in unit costs of
processing and
transactions
Reduction in backlogs
Reduction in overtime
costs
4. Train and capacitate MASM staff in BPM 2016 No of staff trained
for continuous process improvement
Improve product and service pricing 1. Hire actuarial services to develop 2016 Product pricing model
product and service pricing model
2. Fully exploit capabilities of IT and other 2016
systems to generate product and service

42
Strategic Initiative Action Plans Period Performance Measures

income and costs

3. Cost services rendered correctly and 2016
ensure full costs recovery 2017
Improve business intelligence 1. Develop and implement management 2017 Completion rate
information systems dashboards
2. Clean up and ensue data integrity 207 Completion rate
3. Ensure interface of multiple systems and 2017 Completion rate
data sources
Strengthen management of internal 1. Develop and roll out internal and 2016 SLA in place by June 2016
and external customers external SLAs
2. Update and review SLAs annually 2017 - 100% completion of annual
2020 reviews
Strengthen risk management 1. Develop an enterprise-wide risk 2016 Status report and completion
management framework rate
2. Establish a Board Risk Committee 2016 Committee appointed by June
2016
3. Establish and track departmental risk 2016 - Status report and completion
registers 2020 rate
4. Appoint and staff risk function 2016 Risk Officer appointed by
June 2016
Strengthen fraud detection 1. Review and improve efficacy and 2016 Policy completed by June
efficiency of fraud detection and 2016
prevention framework
2. Commence risk profiling of claims, 2016 - Risk profiles
service providers, members and staff 2020 Implementation against
plan
3. Introduce security features on 2016 Implementation against
membership cards plan
Strengthen and improve case 1. Review and optimize current case 2016 Completion rate
management management process and framework
2. Undertake feasibility analysis of 2016 Completion rate
outsourcing case management or
continue providing function in-house
3. Increase coverage of case management 2016 - %age increase in coverage
2020 (year-on-year)
Upgrade ICT to meet industry best 1. Implement ICT migration project to new 2016 - Completion rate against
practices, raise performance system and ensure all modules come live 2017 project plan and budget
standards and reduce operational per project plan Improved system

43
Strategic Initiative Action Plans Period Performance Measures

costs availability
System downtime
2. Improve ICT security 2016 - Incidence of security
2020 breaches
3. Enhance ICT connectivity with key 2016 - %age completion rate
partners 2018
4. Up skill staff in IT competency 2016 - %age completion against
2017 training plan
%age level of uptake and
use of ICT systems and
tools
Strengthen budget performance 1. Implement budget performance 2016 - Variance analysis
management and expense management tracking and monitoring 2020 Overhead absorption rate
management tool
2. Train line managers in budgeting and 2016 %age completion rate against
budgetary control training plan
Strengthen internal audit systems 1. Implement ICT audits 2016 ICT audit capability in
and process place
Fraud prevented or
identified due to internal
audit
2. Develop and implement annual internal 2016 - Performance against plan
audit plan 2017 and budget

Strategic Pillar Four: Governance

Statutory, regulatory and
supervisory compliance
1. Review MASMs investments 2016 Strategy in place and
portfolio and develop a strategy approved by June 2016
to align it to proposed regulatory
and supervisory requirements
2. Implement Board approved 2016 - %age implementation
strategy to align investment 2017 rate against approved
portfolio plan
3. Develop an internal code of 2016 Completion rate
governance aligned to

44
Strategic Initiative Action Plans Period Performance Measures

international best practice

4. Enforce regulatory and 2016 - Clean supervisory
supervisory compliance 2020 reports
Improve corporate 1. Formulate and implement Board 2016 - Charters in place
governance Committee Charters (and 2020
review annually thereafter
2. Introduce board assessments 2016 Annual assessment
reports
3. Train directors in governance 2016 - Performance against
annually 2020 plan
Improve quality, timeliness of Achieve a level of professionalism and 2016 -
audit process and reports outputs that third parties e.g., external 2020
auditors can rely on.
Attain 100% compliance with 2018
international internal auditing standards
(IIAS)
Deliver all /audit and risk reports on time 2016
2018
Enhance sustainable profitability Develop and obtain board approval of 2016
and strategic partnerships corporate social responsibility and
partnerships policy
Implement board approved corporate 2016 -
social responsibility policy 2017

Strategic Pillar Five: Talent Management

Attract and retain quality staff Review and upgrade staff 2016
recruitment policy and strategy
Review staff compensation and 2016
benefits strategy
Continuously train and develop staff 2016 -
2020
Improve staff utilisation and Undertake resource and capacity

45
Strategic Initiative Action Plans Period Performance Measures

manage staff compliment modelling for all departments in the 2016

Society to determine appropriate
staff numbers
Restructure and reorganize MASMs
organogram in response to 2020
Strategic Plan implementation 2016
needs and results from the business
process re-engineering exercise.
Evaluate and re-grade jobs in new 2017
organizational structure
Align organisational culture to
strategy Roll out cultural transformation 2016
programme
o Enforce and encourage staff 2016 -
to live MASMs values 2020
Talent Management Design and implement a talent 2016
management policy and programme
Strengthen systems and
procedures Streamline and automate HRM 2017
systems and processes
Employee health and wellness Design and implement an employee 2016
health and wellness programme

46
Manpower Plan

Our projected manpower plan for the period is summarised in the table below.

Department 201 20 2017 201 201 202

5 16 8 9 0
Operations 36 29 30 30 30 30
Finance 8 9 9 9 11 11
Commercial 18 30 30 30 30 30
Internal Audit 4 4 4 4 4 4
Human Resources and Administration 15 18 18 19 19 19
ICT 6 6 6 7 7 7
Executive 4 4 4 4 4 4

Total 91 10 100 102 104 104

0

Projected Key Performance Indicators and Financial Performance

Our projected key performance indicators and projected abridged financial

performance results are summarised below.

Membership growth is assumed at an annual rate of 5% during the

planning period.

CONTRIBUTIONS RATE WILL BE ADJUSTED BY AN

ASSUMED INFLATION FACTOR OF AVERAGE 10% IN 2017
8% IN 2018-2020

2015 2016 2017 2018 2019 2020

Actual Budget Projected

Econo-
plan 2,200 2,500 2,750 2,970 3,208 3,464
Executiv
e 6,300 7,000 7,700 8,316 8,981 9,700
VIP
11,800 13,000 14,300 15,444 16,680 18,014

47
Projected Key Performance Indicators

Forec Bud Projected

ast get
2015 2016 2017 2018 2019 2020
Market Share (Open schemes) 89% 90% 91% 91% 92% 92%
Principal members as % of total principal 90% 91% 92% 92% 93% 93%
members (Open Schemes)
Principal members as % of total principal 67% 68% 69% 69% 70% 70%
members (Closed Schemes)
Covered lives as %age of total covered lives 89% 90% 91% 91% 92% 92%
(Open Schemes)
Covered lives as %age of total covered lives 65% 66% 67% 67% 68% 68%
(Closed Schemes)
Average age of beneficiaries 25 25 25 25 25 25
Pensioner ratio (% of beneficiaries over the age 5% 4% 4% 4% 4% 4%
of 60)
Claims loss ratio (claims expenses as %age of 78% 78% 80% 80% 80% 80%
contributions)
Non Healthcare Expenditure (administration 22% 20% 17% 16% 15% 15%
fees, managed care costs, bad debts and
reinsurance costs) as %age of contributions
Operating Results % of contributions 0.48 3% 3% 4% 5% 5%
%
Investment income as %age of contributions 5% 5% 5% 5% 5% 5%
Net Results as %age of contributions 4% 8% 8% 9% 10% 10%
Solvency Ratio 20% 22% 24% 25% 25% 25%

Strategic Plan 2016-2020 projected abridged financial

projections performance
48
 2014 2015 2016 2017 2018 2019 2020
Actual Forecast Budget Projected
Membershi
p
Econoplan
27,398 25,320 26,615 27,946 29,343 30,811 32,351
Executive
61,574 60,282 63,366 66,534 69,861 73,354 77,022
VIP
34,306 37,717 39,646 41,628 43,710 45,895 48,190
Total
123,278 123,319 129,627 136,109 142,914 150,06 157,56
0 3
Contributi K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO
ons
Econoplan
548,506 566,434 824,198 922,224 1,045,802 1,185,94 1,344,85
0 6
Executive
3,488,697 4,078,535 5,458,612 6,147,758 6,971,557 7,905,74 8,965,11
6 6
VIP
3,480,142 4,617,476 5,982,340 7,143,443 8,100,664 9,186,15 10,417,0
3 98
Total
7,517,345 9,262,445 12,265,150 14,213,425 16,118,02 18,277, 20,727,
4 839 069
Claims K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO
Econoplan
252,886 339,112 638,753 737,779 836,642 948,752 1,075,88
5
Executive

49
 2,264,850 2,937,350 4,230,424 4,918,206 5,577,246 6,324,59 7,172,09
7 3
VIP
2,915,262 3,945,315 4,636,314 5,714,754 6,480,531 7,348,92 8,333,67
3 8
Total
5,432,998 7,221,777 9,505,491 11,370,740 12,894,41 14,622, 16,581,
9 271 655

50
 2014 2015 2016 2017 2018 2019 2020
Actual Forecast Budget Projected
Surplus K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO
Econoplan
295,620 227,322 185,444 184,445 209,160 237,188 268,971
Loss Ratio 46% 60% 78% 80% 80% 80% 80%
Executive
1,223,84 1,141,18 1,228,18 1,229,552 1,394,31 1,581,14 1,793,02
7 5 8 1 9 3
Loss Ratio 65% 72% 78% 80% 80% 80% 80%
VIP
564,880 672,161 1,346,02 1,428,689 1,620,13 1,837,23 2,083,42
7 3 1 0
Loss Ratio 84% 85% 78% 80% 80% 80% 80%
Total
2,084,34 2,040,66 2,759,65 2,842,685 3,223,60 3,655,56 4,145,41
7 8 9 5 8 4
Loss Ratio 72% 78% 78% 80% 80% 80% 80%
2014 2015 2016 2017 2018 2019 2020
Actual Forecast Budget Projected
Expenses K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO
Administration
1,571,01 1,996,44 2,440,46 2,416,282 2,578,88 2,741,67 3,109,06
1 9 5 4 6 0
Surplus
513,336 44,219 319,193 426,403 644,721 913,89 1,036,3
2 53
Loss Ratio 93% 100% 97% 97% 96% 95% 95%
Investment Income K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO K'OOO
Net of invest income
Finance charges 60,107 503,413 629,266 710,671 805,901 913,892 1,036,35
3

51
Net Surplus
573,443 547,632 948,4591,137,07 1,450,6 1,827,7 2,072,7
4 22 84 07
Loss Ratio 92% 94% 92% 92% 91% 90% 90%

52
 2014 2015 2016 2017 2018 2019 2020
Actual Forecast Budget Projected
Capital Employed
Property Revaluation Reserve 472,912 472,912 486,260 486,260 486,260 486,260 486,260
Share Revaluation Reserve 2,261 2,261 2,261 2,261 2,261 2,261 2,261
Opening Reserve 641,172 1,214,61 1,762,24 2,710,706 3,847,78 5,298,40 7,126,18
4 6 0 2 6
Surplus for the Period 573,443 547,632 948,459 1,137,074 1,450,62 1,827,78 2,072,70
2 4 7
Accumulated Fund to date 1,689,787 2,237,419 3,199,227 4,336,301 5,786,923 7,614,707 9,687,414

53
 MEMBERSHIP PROJECTION

180,000

160,000

140,000

120,000

100,000 Econo
EXE
VIP
80,000
TOTAL

60,000

40,000

20,000

54
 PERFORMANCE

12,000,000

10,000,000

8,000,000

Total Contributions
Total Claims
6,000,000 Gross Sur/(Loss )
Admin Exp
Inves t. Income
4,000,000 Sur/(Loss )

2,000,000

(2,000,000)

55
100%

90%

80%

70%

60%

50%
SOLVENCY RATIO
40% CLAIMS LOSS RATIO

30%

20%

10%

0%

56