Tetiwe Mweemba
With the commemoration of the Insurance week starting tomorrow September 16, 2019, the Pensions and Insurance Association ( PIA) has acknowledged the many challenges the insurance sector is faced with.
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Speaking at the launch of the 7th Insurance Week which runs from the 16thto the 21 of September 2019 under the theme: Raising an Insured generation, PIA acting Registrar Titus Nkwale announced that in view of the many challenges the sector is faced with, the regulatory body has created market conduct which will help in reducing the many challenges the sector is faced with.
“To respond to these challenges, the authority has created a new unit called market conduct. This unit will help with treatment of customers fairly and resolve some of these challenges. “as the regulator, we are aware about some of the challenges that are in the industry which range from genuine complaints of unfair treatment of customers, not being aware of the scope of cover for their product to failure to read the ‘fine print’ or ‘jargon’ at the back of the cover notes. Further, there are also disputes on claim pay-outs due to non-availability of policy wordings that would have spelt out terms and conditions. Unnecessary delays in getting a claim settled is also another frustration faced by some policy holders,” Mr. Nkwale stated.
Mr. Nkwale also announced that the PIA with assistance from the World Bank was currently developing key fact statements.
“Key Fact Statements(KFSs) are part of disclosure requirements that will assist in clarifying terms and conditions of insurance policies. Further, KFSs may also assist in improving financial literacy among Zambians and help them make better choices on purchasing of insurance. It will therefore be mandatory for all insurance companies offering motor insurance, household or contents insurance, home owners insurance, funeral and life insurances to give a key fact statement to improve financial literacy among customers” he explained.
Mr. Nkwale said a total of K1,1 billion was in 2018 paid by the insurers in claims.
“In terms of claims, the industry recorded estimated gross claims of about K1.1 billion compared to K1.01 billion in 2017. This figure represents an industry that is responding to its clients at their point of need. This should help us understand that insurance is there to pay claims. That is the whole purpose of insurance as a financial protection tool,” Mr. Nkwale said.
He added that the industry recorded an overall increase of 16% in terms of gross written premium (GWP).
“Over the years, the industry has been recording steady growth.in 2018; the industry recorded an overall increase of 16% in terms of gross written premium (GWP). In quantum, GWP increased to K 3,183 million from K 2,739 million recorded in 2017. General insurance business accounted for K1,908 million in 2018 as compared to K1,797 million in 2017 whilst long-term insurance business accounted for K1,275 in 2018 as compared to K941.6 million in 2017. Allow me to clarify that gross written premium does not represent profit, rather it is the money collected by insurers that will be secured to pay future claims. On certain policies, the claims can even exceed the premiums that have been paid, which is why a portion of premiums are ceded to reinsurers, for greater financial support,” Mr. Nkwale explained.
Speaking earlier, Insurers Association of Zambia (IAZ)president Paul Nkhoma observed that as a developing nation, it was important for the people of Zambia to plan for the various risks that threaten financial stability and economic gains.
Mr. Nkhoma stressed that there was need to understand that financial vulnerability was all the more reason to obtain insurance.
“Some people would suggest that they would rather set aside spending on insurance during challenging economic times. For example, a new business needs more financial protection, not less. If a fire destroys their stock they may not have the finances to start again. It is better to secure a house with insurance rather than bear the cost of rebuilding if a flood causes damage. The same can be said about health and medical challenges,” Mr. Nkhoma explained.
He said insurance was a practical form of financial protection that would guard against excessive expenditure when misfortune strikes.
Mr. Nkhoma noted that millions of dollars are externalized every year as a result of individuals and companies that seek to cover outside the country when it can be provided locally which is a condition of the law.
“Insuring with locally based and registered insurers is one way of supporting local business and local employment and adds to the growth of the economy. I urge individuals and businesses to take this into consideration,” he emphasized.
He cited credit as one of the challenges the insurance sector is faced with.
“There seems to be a bad culture when it comes to credit services. Many times insurance is given on credit or installment plans, but there is a high rate of default. This default has an impact when it comes to paying claims, financial reporting and the overall stability of companies,” Mr Nkhoma said
He called for culture change when it came to credit if individuals and businesses where to add value to the economy.
“We must work together with all stakeholders to find a solution. But the solution begins with all of us changing the way we handle credit, and considering how defaulting on payments affects other clients. I cannot overemphasize the impact this has on the industry, on claims payments and the economy,” Mr Nkhoma said
And IAZ has since requested the Government to priority finalizing the Insurance Bill.
“The insurance industry looks forward to the long awaited Insurance Bill finally going to Parliament and a new law being enacted. We humbly request that Government makes this important piece of Legislature a priority,” Mr. Nkhomaemphasized.
Read this article from the original source: 1.1b Was In 2018 Paid By The Insurer In Claim-Pensions And Insurance Association(PIZ).