The benefits derived from insurance are unquestionable, yet marketing this product to the Zimbabwean market is fraught with challenges. Ipec (Insurance and Pensions Commission) Commissioner Tendai Karonga in an interview with the Financial Gazette identified the top five challenges that the insurance industry is facing to boost consumer confidence in the sector.
1. Insurance fraud
The vice is a worldwide problem, which has increased in recent times because of the increased complexity of the insurance business coupled with increases in cyber-crimes. Insurance fraud can be perpetrated from within or by outsiders.
Insurance fraud increases the cost of insurance to society and depletes the insurance pool.
An IPEC-commissioned survey carried out by QED Actuaries and Consultants revealed that the growth in the industry’s claims ratio was to an extent attributable to insurance fraud.
2. High levels of premium debtors
The economic environment currently obtaining has forced policyholders to enter into arrangements to pay premiums in instalments in the process constraining the insurers’ capacity to settle claims timeously.
3. Poor corporate governance
Some directors and key personnel have been accused of abusing policyholders’ premiums in the process failing to settle claims. Poor management pension and provident funds is also a major challenge in the industry.
4. Poor claims settlement
Refusal by the insurance firms to honor genuine claims hence killing the little existing client confidence
5. Fake insurance policies
Although falsified and inflated claims are the most common types of frauds, companies are losing customer confidence due to the proliferation of fake insurance policies in the market. Customers only discover that the policy they purchased is fake when they make a claim, thus losing trust in insurance.
The next insertion will give the strategies that Ipec has used to combat these challenges as it moves to restore consumer confidence.
This is an abridged version from the Interview