Insurance companies told to innovate for big business

Business Reporter

…as companies continue to outsource insurance services

Zimbabwe Insurance Pensions Apex Council (ZIPAC) has raised concern over the growth and profitability of the insurance sector following the externalisation of the insurance business to foreign players.

The concern was raised during a meeting with the Minister of Finance and Economic Development, Professor Mthuli Ncube last week. The meeting was convened to discuss pertinent challenges that affect the insurance sector. 

During the meeting, ZIPAC bemoaned the fact that companies that bring FDI always insure their businesses externally and not with the local companies. 

The local insurance body pleaded with the Minister to put in place measures that will ensure that importers, exporters and FDIs use local insurance companies.

ZIPAC cited Beitbridge-Harare-Chirundu highway and the Kariba South power expansion projects as some of the projects that outsourced insurance from foreign companies.

ZIPAC also implored the Minister to adopt a system where marine insurance is domesticated. The council said that similar measures were implemented in other countries such as Tanzania and Uganda among others countries.

The Minister, however, emphasised that some projects from other countries come with conditions that demand insurance to be done sourced from their parent countries.  He said there was not much that can be done to alter those Memorandums of Understanding (MoUs).  Minister Mthuli added that some FDIs were so huge that the local insurance companies had no capacity to fully cover them, hence the need for them to outsource their insurance from external players.

The Minister further stressed on the need for local companies to be innovative and come up with attractive services to both local and external customers. The Minister further implored them to come up with relevant import and export insurance packages that will enable them to tap into the market that they want.

The Minister revealed that Government had taken the first step and demonstrated leadership by providing US$75 million to cater for pensioners who were affected during the currency change. Minister Mthuli urged the Private Sector to follow suit and implement the 2009 compensation as enunciated by IPEC insurance guidelines.