In Zimbabwe, the word INSURANCE, normally sends shivers down the spines of many, who think that it is a monster, others think it’s for the affluent while others think it’s just a luxury and thus an unnecessary expense. However, for as little as, “$0, 20 cents a day you can insure a house worth $40, 000.00,” says Luke Ngwerume, the Managing Director of an online insurance and financial aggregator Zimselector.com.
BY Donald Tafadzwa Chidoori
It has been more than three months since a spate of floods at the beginning of the year resulted in the destruction of homes, property, crops, livestock, and even human life in some parts of the country. Since then, the government has been looking for donations to help the floods victims. The government also needs more than $80 million to repair roads and bridges destroyed by incessant rains.
Since the floods have been declared a national disaster, we have observed with keen interest how members of the international community and well-wishers have chipped in to help the flood victims.
Just a few days ago the Chinese Red Cross Society, the Chinese Embassy and the Chinese community donated goods worth over $60, 000 to the victims of flooding. And among these goods were biscuits.
Who really needs biscuits when a person has lost a home and their livelihood? Not to say that the kind gesture by the Chinese is not appreciated, but after losing property worth over $35, 000.00 a person would need a temporary shelter to dwell in as they get up on their feet not biscuits.
There comes in Insurance … Many people invest thousands of dollars on property which they do not insure, which in times of natural disasters – just like happened this rainy season – is lost and never recovered.
Floods induced by Cyclone Dineo damaged over 2000 houses and left over 700 families displaced and destroyed a lot of infrastructure.
Zimbabwe for some time has been subject to periodically recurring weather shocks; but not before had it affected the affluent suburbs of Glenlorne and Borrowdale.
Floods have historically affected the lowveld and the rural parts of the country. Very few of us never imagined that we would get excessive rains that would result in the collapse of houses and cars moving from one point to another in the affluent suburbs of Borrowdale.
For many people in the high density suburbs the images and the drama that followed the destruction of properties in Borrowdale was just fascinating, while for those affected it was traumatic. The important lesson amidst this drama and trauma was that no one is safe from weather risks be it you are rich or poor, live in urban or rural areas.
The destruction that happened in Borrowdale is a wakeup call that no one is safe from weather conditions and that within a few hours you can lose investments you spend a lifetime building.
It is no secret that the country (Zimbabwe) does not have sufficient capacity to deal with the emergency effectively on its own. However, with insurance if we lose any assets today we are able to replace them tomorrow.
Millions worth of property destroyed
The wave of floods brought wanton destruction to people’s homes and other properties in parts of Borrowdale and Glen Lorne, while In Chitungwiza some houses were severely affected by the floods.
Around 100 families were evacuated from their homes in Hwange District after severe flooding struck in the early hours on 14 December, 2016.
In Budiriro, Marimba River overflowed forcing around 30 families to evacuate their homes. Zimbabwe Red Cross Society and Harare City Council worked to evacuate and provide emergency for the 30 families.
The assistance that has been administered to cope with the aftermath of these floods has been often ad hoc, and sometimes untimely.
The floods have increased the poverty levels of those affected especially in areas in Gokwe where people lost everything from their shelter, belongings and even domestic animals which were their source of income.
Emergency reactions in Zimbabwe have often led to distortions, misuse of resources, and a lot of rent seeking as was witnessed in the Tokwe- Mukosi disaster. A few years later victims of the Tokwe-Mukosi disaster are still struggling to make ends meet.
This is because the floods deprive people of their assets; the reduced endowment levels have not helped either as most traditional donors are cutting down on their foreign budgets.
It is estimated that the country will need more than $100 million is needed for emergency repairs to 140 bridges and roads that were destroyed by the floods. At the same time the country is looking for international assistance to help build temporary shelter for more than 1900 people who have been declared homeless, 74 schools and more than 2500 homes that were damaged by the floods.
The majority not insured
The majority of Zimbabweans are not insured, and the few that are insured have inadequate insurance and only have piece meal benefits.
“We believe that a large number of the families and businesses that have had their properties damaged or destroyed by these floods do not have any insurance or in some cases have inadequate insurance because they had under-valued their property,” says Gugulethu Ngwenya, the General Manager-Business Development, at Zimbabwe’s leading short term insurer Nicoz Diamond.
Some people who had inadequate insurance only insured their homes and did not include any extensions, walls and other improvements with the fear of increasing the sum assured. As a result insurers did not pay them proportionately for their loss.
However it was all smiles for those who had properly insured their houses.
“For the few that were properly insured, the risks of flooding were fully covered by most insurances, and they enjoyed the benefit of having their repairs fully paid for by their insurers,” added Gugulethu.
According to the General Manager – Corporate and Strategic Development at Old Mutual Insurance Zimbabwe (Omico), Mr David Muchakagara it was unfortunate that most people were not insured with most doubting the capability of Insurance companies to pay claims. He, assured that the industry had the capacity to pay claims.
“Out of the 20 Insurance companies less than half at the end of last year where in a profit situation, which means claims are being paid out there, ” said Mr Muchakagara.
Mr Ngwerume confirmed that at least one of the insurance companies had paid over half a million dollars in claims as a result of flooding as of March 2017.
“There has been mayhem caused by extreme rains during this season I don’t want to mention names though but I know of one insurance organisation which has actually right now paid half a million dollars in a space of three weeks to people whose asserts have been damaged,” confirmed Mr Ngwerume.
In Zimbabwe house insurance is considered a luxury and “Most people usually considered house insurance as a risk-mitigating tool when the level of disposable income becomes largely significant,” said Gugulethu said speaking to journalists at a Journalist Mentorship programme organised by Zimselctor.com.
However, as the climate is becoming increasingly unpredictable and erratic making homes more susceptible to flooding, it is important to have insurance.
How does Insurance help?
Most people think that the role of Insurance is only to pay for claims when disaster strikes. However, that is not the only role insurance plays. Insurance advisory services play a major role in educating its clients on risk mitigation skills and strategies.
The Borrowdale and Glen Lorne disaster has led to finger pointing with the City of Harare attributing the destruction of property and flooding of homes to precast walls, “that disturb the natural flow of water.”
Risk Advisory services by Insurance companies assist present and prospective clients in proficiently articulating risk management skills. This empowers people with risk management skills that will sufficiently prevent unsustainable practices and environmental damage. Reducing the levels of risks associated with flooding.
Insurance is there to deal with those unforeseen incidences that take place, so you find that Insurance companies also play a pivotal role in helping people to recover, as well as to reduce the impact of flooding.
The short of it is that in cases of natural disasters without an insurance policy you lose your house.
Many victims of floods become homeless and are struggling to find a place to stay. According to Minister Kasukuwere, more than 1900 people have been declared homeless as a result of floods. However with home insurance, insurers find you a temporary house to rent as your house is being repaired or rebuild.
“For some of the people who have had their homes damaged because of the storms and so forth and their homes are not liveable we would actually pay for alternative accommodation for them whilst their home is being repaired or reinstated,” Gugulethu said.
“So insurance cannot bring back life, if your father is dead he is dead, but there were things that your father was doing for you either sending you to school providing you with accommodation, food all these necessities without the funder insurance comes in pays for those things,” said Ipec’s Head of Prudential Supervision, Mr Pupurai Togarepi at an insurance journalists mentorship programme hosted by Zimselector.com.
Low insurance premiums
After a number of people lost their homes due to the floods, insurance companies have been flooded by people inquiring on the cost of insuring a house.
“Home owners insurance is one of the cheapest insurances you could ever get especially when you look at the value of your home and you think about the sweat and blood that went into either buying or building that home and the amount of money that you would pay in terms of insurance it’s ridiculous actually,” highlighted Gugulethu.
“For as little as $0, 20 cents a day you can insure a house worth $40 000, translating to approximately $73 a year,” elaborated Luke Ngwerume.
Where can you buy home owners or householders Insurance?
In Zimbabwe you can buy home owners insurance policy at any Insurance and Pensions Commission (Ipec) licensed insurance company (most of which have offices in the major cities of Zimbabwe) or you can use online multiple agents like ZimSelector.com who aggregate insurance products enabling clients to make comparisons of insurance packages from different insurance companies in Zimbabwe.
Clients can also buy homeowners Insurance through registered and licensed insurance brokers and agents. Clients can also contact different Insurance bodies, associations and institutions like the Insurance and Pensions Commission, Life Offices Association of Zimbabwe, Insurance Council of Zimbabwe, etc to verify the authenticity of insurance companies, brokers or agents.