Insurance Industry in dire need of professional body

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The insurance sector the world over has been lauded for creating the most successful efforts in creating a professional certification model.

By Donald Tafadzwa Chidoori

The same is not true for the whole insurance industry in Zimbabwe. Over the years the industry has been making the wrong headlines, a plethora of scandals, fraudulent claims and suspensions, closures and deregistration of Insurance firms have made the situation worse. The Cimas and Corporate 24 impasse has not made the situation any better; the PSMAS Salarygate scandal practically destroyed the medical health insurance sector. The continued closure and suspension of companies by the Insurance and Pensions Commission (Ipec) due to failure to pay claims, failure to meet minimum capital requirements the recent NSSA scandals and a litany of other scandals over the years all point to the need to have a professional body to cater for the registration and deregistration of professionals in the insurance industry.

Synopsis of unprofessional conduct within the Insurance Sector

2010: The insurance industry in Zimbabwe was savaged by corruption and illicit deals by that led to the closure of 18 companies.

Jan, 2014: Navistar insurance scam rocks AirZim – THE insurance scam prejudiced Air Zimbabwe (AirZim) of more than US$10 million looted over a five year period by senior managers at the airline and Navistar Insurance Brokers.

2013 – 2015: Five insurance companies de­registered – These were Agriculture Insurance Company, Jupiter Insurance Company, SFG Insurance Company, Suremed Insurance Company and Altfin Insurance Company.

Sept 2015: 11 insurers failed to meet the minimum capital requirements for the sector and were subjected to an investigation on their operations pending cancellation of registration.

2015: Workers at the defunct Allied Bank petitioned the Insurance and Pensions Commission (IPEC) to investigate allegations that Allied Bank diverted $400 000 from the workers’ pension fund for their own use before withdrawing another $400 000 from the pension fund administrator without the knowledge of the workers.

Feb, 2016: The Insurance and Pensions Commission (Ipec) suspended four insurers and an insurance broker from issuing or renewing insurance policies due to unsound finances and unethical business conduct.

 

The Psmas scandal has left the brand Psmas, its clients and service providers failing to get a return in investments and the general public losing confidence in investing in the risk industry, while the perpetrators are enjoying life and basking in the sun as if nothing happened. Ever since the salarygate scandal PSMAS has been embroiled in controversy as the members of the organization are failing to access medical health services from service providers who cite the failure of PSMAS to pay them for the services already provided. Members are also failing to access the drug facility which the company has been providing for the past 10 years. While nothing was done to censure those responsible for this demise.

While in the Air Zimbabwe saga the perpetrators from within Air Zimbabwe have managed to face the wrath of the law those from the insurance companies they were having under dealings with were left scot free. It will not be a surprise if those that were employed at the companies that were closed by Ipec due to poor corporate governance and unethical practices were reemployed in the insurance or financial services sector.

While most insurance agents are honest and ethical, there are a growing number of dishonest agents who are cheating their customers. Instead of arranging the policies with the Insurer, they create fake policies and steal the premiums. Customers only discover the scam when they make a claim and the insurer cannot trace their policy because it doesn’t exist. Cases of Insurance on the revenue and payment cycle – on premiums and on claims are on the increase. The effects of this kind of fraud are felt by many through increased premiums, reduced profitability of insurers, corporate or insurance failure, insurance bankruptcy amongst others. This increases the need of an insurance body that can register and deregister agents and prevent deceitful agents from ever practising again.

If it was in the legal services these fraudulent insurers would have been disbarred and would never operate as lawyers again the same can be said in the medical field whereby if doctors are operating in an unprofessional way they lose their licenses and can never operate as doctors again.

Insurance fraud negatively impacts on consumers; it is also a huge cost for society. In Zimbabwe for example, Great Rivers Church cancelled its trip to a Church conference in Botswana after an employee of KMFS insurance issued them insurance cover despite the fact they were deregistered, this prejudiced the client and the client had to go to court to claim a refund

In the insurance sector a fraudulent agent or insurer maybe blacklisted but the process of blacklisting, data base and access to blacklisted agents is not well publicised and documented. There is no clear complaints process and the fact that there are multiple regulators in the insurance industry makes it difficult to know which regulator to report to. The blacklisting of unprofessional members in the insurance industry is not sufficient to improve professionalism, curb fraud and enhance consumer confidence in the industry. The Industry needs to professionalise itself legally just like the doctors and the lawyers to put the insurers in check and to ensure that they face the wrath of the law when they commit fraud or mismanage companies at the detriment of the client. This can only be done if the sector sets up a regulatory authority of the profession, a professional culture that is nurtured by professional associations and a code of ethics.

They are a number of ways that the industry can take to professionalise itself, but the best way would be to make the Insurance Institute of Zimbabwe (IIZ) to take the lead in forming a professional body for the insurance industry since it already offers professional qualifications that are recognised in the Insurance industry. IIZ should not only offer professional educational services but like other Insurance Institutes the world over, should register Insurance professionals who should sign a code of conduct that will be legally binding. The insurance industry in Zimbabwe needs to have clearly laid out concepts, principles of professionalism and penalties for transgressing.

There are already professionals groups and associations in the Insurance Industry like the

  • Insurance Council of Zimbabwe (ICZ)
  • Life Offices Association of Zimbabwe (LOA)
  • Zimbabwe Insurance Brokers Association (ZIBA)
  • Zimbabwe Association of Reinsurance Organisations (ZARO)
  • Zimbabwe Association of Funeral Assurers (ZAFA)
  • Insurance Institute of Harare (IIH)
  • Insurance Institute of Bulawayo (IIB)
  • Society of Fellows

These should thus come together to standardize the profession so that it can be respected like the Accounting profession in Zimbabwe. They should come together to set up a professional body headed by IIZ to set standards, regulate, monitor and police insurance professionals.

IIZ should go further by certifying professionals to standardize their work.  This will be based upon present-day certification efforts such as evaluation of the manager’s experience and education credentials; participation in intensive workshops or seminars; an examination of management knowledge; the acceptance of a code of ethics; and provision for continuing education and development.

The Insurance Professional Body should also be responsible for run a range of accreditation schemes that provide formal recognition of high quality learning and their contribution to professional development. Recognise eligible qualifications and formally assess company training programmes. And develop specific codes for specific professionals in the industry like;

  • Specific code of ethics for insurance executives/managers
  • Specific code of ethics for insurance brokers and agents (intermediaries)
  • Specific code of ethics for actuaries
  • Specific code of ethics for insurance consultant experts
  • Specific code of ethics for adjusters

The insurance sector has been lauded for creating the most successful efforts in creating a certification model. While this certification model is currently being used the world over, it is not being used in Zimbabwe. At the same time issues concerning professionalism in terms, of fraud, insurance scam, corruption, ethical conduct, and poor customer relations continue to be on the increase.

This is largely contributed by the fact that there is no standard entry requirements and binding code of ethics for the industry. Currently in Zimbabwe anyone can be a broker, insurer, agent or work within the insurance industry without any insurance qualification. While other companies require someone to have a minimum Certificate of Practice (COP) from IIZ it is not the same for all. Fraudsters continue to work in the industry hopping from one company to another without reprimand.

Countries like the UK that have professional bodies to monitor their players in the industry have reaped the fruits of doing so. Professional employees do not only enhance the image of the business, but also help employees deal with customers relations, that enhance business growth and company success.

Zimbabwe has a history of closing companies that fail to pay claims but the perpetrators are never punished. Governments at regulatory levels, the Insurance Industry and companies at recruitment levels should set up stiff penalties that will not allow defrauders to work in financial services. These might not prevent unprofessional behaviour but they will definitely limit and reduce its occurrence. Censure should also be sufficiently punitive to encourage members to abstain from illicit deals and to maintain ethical standards that conform to the requirements of the Insurance profession.

To sum up the system of blacklisting offenders is not fully regulated and this has also seen blacklisted insurers continually working in the industry. In short there are no specific laws which govern ethics and professional culture in the Insurance Industry in Zimbabwe. This has resulted in cases of unprofessional conduct being dealt with in the courts of law and often perpetrators are reemployed in the Industry. Thus the need to form a professional body to regulate professionals in the industry and to make sure that deregistered professionals will never work in the industry.

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