Econet Wireless Launches Funeral Assurance Scheme in Zimbabwe

The quest for sustained mobile-driven innovation in Africa has yielded interesting results in recent times. Mobile banking has received widespread acceptance across the continent and this is spurring similar innovations powered by the mobile technology. One recent innovation is the funeral assurance scheme launched by Econet Wireless in Zimbabwe.

Dubbed EcoSure, the scheme replaces an earlier unsuccessful initiative, EcoLife, which was terminated in 2012. This innovative scheme has been enabled by the popularity of mobile services in the southern African economy and fueled by ongoing efforts by mobile operators to tap into the banking and insurance sectors in Zimbabwe via the provision of technology platforms that enhance financial inclusion and serve the uninsured and unbanked.

The service, according to Godwin Mashiri, Eco Sure General Manager, offers affordable and readily accessible funeral cover as registration can be done via mobile phones. The service offers two pay out options in the event of death, either through nominating a relative who will receive the money in their EcoCash account or through a chosen service provider.

To enable an effective roll out, Econet Wireless has partnered with 7 service providers including big brands such as Nuffield, Doves, Fidelity and the top three service providers from Bulawayo, an industrial city in Southwestern Zimbabwe. Still engaged in negotiations with other service providers, the firm has employed 500 agents who will be responsible for facilitating claims.

Econet discontinued EcoLife, its first venture into the insurance sector, in 2012. The service had amassed a whopping 1.2 million customers before its termination, thus indicating the potential for success of a similar business. The service had allowed Econet’s subscribers to get free life cover on minimum airtime of only $3 per month. No monthly premiums were required unlike conventional insurance schemes.

With this new service, Econet hopes to grab a significant share of Zimbabwe’s growing insurance industry. BusinessMonitor reports that gross premiums have gone up by 350 percent over a four year period ending 2014. With $500 million expected to be realized by the end of the year, its return to the insurance business may be a very timely move.

By Emmanuel Iruobe http://insurance.einnews.com/article/239594768/2eSmnNZ8r1IJOHOV

Market Report, "Life Insurance Policies and Premiums in Zimbabwe to 2018: Market Databook", Published

The Official insureZIM Website | insuRANCE simpLIFIED for the ordinary Zimbabwean

New Insurance research report from Timetric is now available from Fast Market Research

Boston, MA — (ReleaseWire) — 11/10/2014 — This report is the result of Timetric’s extensive market research covering the life insurance industry in Zimbabwe . It contains detailed historic and forecast data for policies and premiums. “Life Insurance Policies and Premiums in Zimbabwe to 2018: Market Databook” provides detailed insight into the operating environment of the life insurance industry in Zimbabwe . It is an essential tool for companies active across the Zimbabwean life insurance value chain and for new players considering to enter the market.
Report Scope:
– Historic and forecast data for policies and premiums in the life insurance industry in Zimbabwe for the period 2009 through to 2018.
– Historic and forecast data on gross written premiums, earned premiums, premiums per capita, number of active policies, insurance density, sum assured and insurance…

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70% of Zimbabweans uninsured

At least 70 percent of Zimbabwe’s adult population in not insured at all – be it medical aid or funeral cover – a survey has revealed.

According to FinScope Consumer Survey Zimbabwe 2014 (FinScope), 68 percent of the 70 percent say they cannot afford insurance cover at all.

“… most of those claim that insurance is not affordable and too expensive,” said FinScope.

“Of those who do not have insurance, 30 percent believe they do not need it while 10 percent do not know how insurance works,” it said.

The FinScope study also indicated that of the insured 30 percent, most had funeral cover and medical aid.

Further to this, Finscope said informal insurance such as burial societies seemed to be popular among those who claimed to be insured.

Zimbabwe has a population of slightly over 13 million, according to findings of the last national census conducted in 2012.

The FinScope study was based on a nationally representative sample of adults who are 18 years or older, with a total of 4 000 face-to-face interviews conducted by Research Continental-Fonkom while Africa Corporate Advisors were the local project coordinator.

However, consumers now view insurance as a luxury due to worsening economic conditions being experienced in Zimbabwe, thus the future of the sector is gloomy, according to industry players.

Experts attribute liquidity problems being experienced by the country as the main cause for the low insurance uptake in the country.

The country’s slowing GDP growth; rising inflation, unemployment and the financial pressure on consumers all weigh on the insurance operating environment in the country.

Currently, the amendment of the Insurance Bill is in progress, and the new one set in new capital in July last year.

It places emphasis on corporate governance, monitoring and compliance in the sector.

The insurance sector was depressed in the first half of 2014, with the industry’s contribution to the stock exchange’s turnover down 5,97 percent, according to stock broking firm IH Group (IHG)’s insurance index.

The IHG report said the sector’s year-on-year to June contribution to the bourse’s turnover was also down 8,18 percent.

The sector’s contribution to total market capitalisation was three percent in June 2014 down from four percent in June 2013.

IHG’s corporate analyst Vikesh Goran said the insurance sector’s poor performance and contribution on the ZSE is largely attributed to the liquidity crunch.
– dailynews

Health insurance in Africa on the rise

Cape Town – The future for health insurance providers in Africa looks bright, according to Andrew Schwulst, CEO of Liberty Health.

“With an average annual growth rate forecast of 6% for Africa’s 54 countries in 2035, the continent is alive with opportunity,” says Schwulst.

“The growing presence of large corporates in Africa is a welcome boost for job creation and local economies. Economic growth directly translates into a growing workforce – this is good news for insurance companies.”

Expats, international companies operating on the continent, small business owners and the general public are all contributing to a growing middle class. Figures indicate that Africa’s middle class has more than tripled over the past 30 years. This trend, which is set to continue in the foreseeable future, bodes well for the health insurance industry.

The most recent Global Economic Prospects Report by the World Bank shows that 54 African economies collectively grew on average by 3.4% last year. Whilst this is lower than previous years, Africa’s average growth rate exceeds expansions recorded in the United States (1.9%), Europe’s eurozone (0.4%), Australia (0.7%), or even the world (2.4%).

Top African performers last year, were Ethiopia (10.2%), Ivory Coast (8.4%), the Democratic Republic of Congo (8%), Rwanda (7.4%) and Tanzania (7.2%).

“Africa’s middle-class growth trajectory is evident in consumer spending habits, with increased focus on retail, telecommunications, financial services and healthcare,” says Schwulst.

The International Monetary Fund (IMF) projects that the number of Africans entering the workplace will exceed that of the rest of the world combined.

“The increased demand for goods and services is also attributed to the growth of small and medium-sized enterprises. Health insurance providers in Africa are yet to fully tap into the SME market,” says Schwulst.

He cautions, however, that one size does not fit all regarding health insurance products for Africa.

Released by :

fin24.com

Problem faced by Health Care financing in Zimbabwe.

Shahid ( 2002) defined a health system as the sum total of all the organizations ,institutions and resources whose primary purpose is to improve health. Naywinaung (2010)  defined health care finance as a branch of finance that helps patients and health care beneficiaries to pay for medical expenses in the short and long terms. According to WHO(2002)  “Health care financing is a function of health system concerned with accumulation ,mobilization and allocation of money to cover the health needs of people , individuals and collectively , in the health system”.Meck Manuals (2016) described healthcare financing as the mobilization of funds for healthcare, allocation of funds to achieve equity and the mechanism for paying healthcare. Healthcare is paid for by government programs commonly known as public expenditure, private expenditure, external aid, employer-employee based schemes and joint partnership between the government and donors.

Zimbabwe, just like many developing countries have faced many challenges in provision of healthcare services which include lack of funds, disparities in access of healthcare, religion beliefs, poor infrastructure, corruption and lack of human resources. Even though the Ministry of Health and Child Welfare (MoHCW) headed by Dr Parerinyatwa have tried to improve the health sector, those factors have been detrimental to healthcare financing in one way or the other.

Donor Aid the backbone of Zimbabwe’s health sector.

The major problem being faced by the Zimbabwean health care system in trying to finance the system is that it mostly depends on donor funds.Chipfera(2015) explains that the Zimbabwe’s public health sector is in crisis as the government fails to adequately fund it , leaving external donors and foreign countries to chip-in with $147 million support against the state ‘s meager $53 million in 2015”without the donor funding , Zimbabwe ‘s health system would have virtually collapsed given that it is founding on the majority of health programmes. The mere fact that the health care system is based on donor funds, people are dying of needless from preventable disease as donor funds may not be available when they are needed the most. Rusike (2015) said the donors should come in to complement government efforts to support the health services. Donor funds are distributed through various programmes, for example one of the major donor, Global Fund will fund malaria programmes in the country to the tune of $ 106 000 000 and HIV/AIDS initiatives will receive $ 6 900 000 of the money on HIV/AIDS programmes. Matongera (2015) said that the money received from donor funds were inadequate making it impossible for the country nurses and doctors to run the country’s public hospitals and making it difficult to allocate the funds.

Medical inflation or health care inflation

Also the other challenge being faced in trying to finance the system is medical inflation. Gottlieb (2015) defined medical inflation as the continuous increase in the heath care spending ,measuring the cost of providing health insurance or calculating the rise in prices charged for the actual medical care.Mutenga (2016) said that Zimbabwe’s medical costs are arguably the highest in the Southern African region. Ruwende (2014) explains that a significant increase in the medical costs makes it difficult in allocating the funds in the national budget and Chipfera (2015) argued that the reason for short fall of $ 142 000 000 was as a result of continuous increase in the medical costs. Rejda (2008) said that one of the major drivers of costs in the medical system are increase in medical costs, including physicians, nurses, medicines, medical equipment. Shumba (2016),said that some locals are reportedly joining foreign medical aid schemes to avoid paying exorbitant contributions to the medical aid societies in the country. Patients who require blood transfusion are going to Zambia where they are paying $50 for a pint compared to local hospitals which  charge between $140 and $200. This has actually reduced the amount of financial resources being mobilized by the private insurers.

Medical fraud

Also, one of the challenges being faced in financing the health care facility is medical fraud. Rejda (2011) defined medical fraud as the ability to spread false billing on the services rendered to a patient. It may also include billing for services which were never rendered either by using genuine patient information, sometimes obtained through identity theft or by fabricating the entire claims with charges for procedures or services that did not take place. Medical fraud also involves performing medically unnecessary services solely for the purpose of generating insurance payment for example nerve-conduction and diagnostic testing schemes. As according to the Gumbo (2015), the move by Paul Chimedza to allow medical practitioners to charge the tariffs, had actually resulted in an increase in Zimbabwe Medical Association (ZiMA) tariffs. The move contributed to the increase in fraudulent claims. He also highlighted that in May 2015 Cimas Medical Aid society suspended its online drugs claim facility after it  lost $1 200 000 in fraudulent claims and also First Mutual Life Holdings health insurance arm in the same year (2015) received over $1 500 00 claims in the first four months. The high costs of medical services pushed at a faster rate, making them unaffordable and more members

 

Medical malpractice

Rejda (2011) defined it as the cost which arises as a failure to provide a standard of care by heath care providers. Physicians and medical health providers have been abused of professional negligence and offer wrong treatments which may worsen the disease or even create a new one. Medical malpractice has contributed to the problem of too much defensive medicine. Rejda (2011) explained  defensive medicine as a situation when physicians and hospitals conduct more tests , take more x-rays firms, magnetic resonance imaging or keeping patients hospitalized longer than they might otherwise think necessary in the absence of potential liability.This thereby increases the costs to public expenditure and  will lead to misallocation of funds.

 

Medical corruption

Zimbabwe also finances its healthcare through private insurance. These are voluntary contracts by an insurer like Fidelity life Assurance Ltd to exchange a set of benefits for a payment of periodic premiums. In trying to finance the health care system, medical corruption has posed to be one of the major financing problem affecting our system. In simple terms medical corruption means corruption by the medical practitioners that are doctors and nurses in providing their services.  Medical corruption makes it difficult to finance the health system as more than 5% of the money and drugs received is lost due to corruption in public hospital. Medical corruption may be through resale of pharmaceuticals as it is the greatest source of income for the health care workers.  “One can only accuse the system, not the individual doctors,” Butenop said in an interview with DW. “When doctors and nurses aren’t paid regularly but turn up for work anyway, they of course want to ensure a source of income – and they let the patients pay for that.” for example in 2012(Herald) more than two-thirds for drugs meant for free distribution in the public sector went unaccounted for.

Corruption

More so, corruption is possessed to be a major health care financing in Zimbabwe.  Corruption is the abuse of public office for financial gains. Corruption may be involved, for example in construction of the health care centres or hospitals, purchase of instruments, supply of medicines and goods and in appointing of health professionals.  Gumbo (2013)said that Ministry of health and child welfare audit team has unearthed a scam at Chivhu General hospital involving $ 2 500 000,in which officials flouted tender procedures , inflated quotations by more than 700% of the market price. The auditors found that Markford Distributors , which won tender to supply one digital blood pressure test machine , charge $ 700 for the item that cost as little as $ 80 at Mycote Trading (pvt) ltd. This makes it difficult for the government to properly finance the health care system since the funds which were allocated for that project are now misused and used for other projects and had been channeled out of the system for personal gains.

Lack of transparency and accountability in the health care financing system

Dorfman (2008) pointed out that lack of transparency and accountability in the health financing system as one of the challenges being faced by most developing nations. Zimbabwean health care system also tend to have weak and poor legal systems and regulations. There is lack of accountability (answerability), information imbalances between providers and patients as well as between suppliers and providers. These characteristics make the sector more susceptible to corruption. “Money in the government is not always accounted for and does not always make it the hospitals”, (health care professional). Without clear policies and practise in improving transparency it becomes difficult collection and allocation of the funds.

Fungibility of donor aid

As stated by USAID ( 2008 ), developing countries especially in Africa depend on foreign aid when financing its health sector. In SUB SAHARA region foreign aid funds contribute about 50% of total funds budgeted for the health sector. Africa’s high dependency on donor aid for health sector financing raises several concerns that may burden the health sector itself. As reported by USAID ( 2008), Zimbabwe’s external assistance account for approximately 7% of total health expenditures by the year 2008 and rose to 19% by 2010(Governance and Management for public health financing in Zimbabwe  2015 P11).Fungibility of donor aid funds is one of major concern that might strain the financing of the health sector. Defined by the article released by USAID ( 2008 ) Fungibility of donor aid fund is,” diversion of funds to public expenditures other than those for which the aid is intended, including tax reduction or debt repayment.” It will result in creating a gap that was intended to be covered by the external assistance. Zimbabwe is highly characterized by the virus of fungibility of donor. Dugger (S 2008) reported that Zimbabwe received 7.3 million donated by the Global fund to cater for aids, TB and Malaria. The funds were diverted from the intended purposes as it was used to acquire Agricultural equipment that included 3000 tractors and 105 combined harvesters. The move led to low performance3 in the sector. For example the government had budged to train 27 00 people to assist in the health field for the outbreak of malaria but due to the diversion of funds only 495 were trained.

 

 

 

 

Public sector financing rely on taxation

Healthcare in Zimbabwe is mainly financed by the public sector with the Ministry of Finance through the MoCHW. This has created many problems in healthcare financing. The government of Zimbabwe had found itself in repeated dilemna of lack of funds to finally disburse to the health sector. The MoHCW (2012) reported that only 10% which was $150 million of the amount allocated by the Ministry of finance was disbursed. The main reason why the government fails to honour its obligations is because it relies mainly if not solely on tax revenues for financing its operations, with more than 90% of the taxes channeled in paying civil servants and the remaining percentage to finance different departments

Government prioritize other sector

Zimbabwe also tends to priotise other service in budgeting through the Ministry of Finance. The 2016 budget allocated only 8.3% of the total budget to the health sector.. The public office has also been for personal gain. According to Gumbo (2015) it must be noted that Minister of health Dr Parerinyatwa, deputy minister Aldrin Musiiwa and Secretary Brigadier General Gerald Gwinji, are all practicing professionals, running private surgeries and this compromise their ability to advocate for an increased percentage of health funds in the national budget because this affect their own surgeries if the government buy medicine outside the country.

User fees

Another way of financing healthcare is through user fees. According to the Health System Assessment (2010) this refers to the money paid by patients to public hospitals and local clinics. According to the 2012 National Budget presented by the former Minister of Finance, Honorable Tendai Biti, the issue concerning user fees was highlighted on and it was said that the introduction of user fees had two potential objectives namely raising of revenue to fund or part-fund the services and generation of a set of financial incentives to encourage more efficient production and use of services. However, user fees in public health do not appear to be a major source of funding in some localities. For instance, a report by the City of Harare published in 2008 reported that 95% of patient’s accessing healthcare at its two major hospitals did not pay a user fee, and users fees accounted for only 0,03% of the city health budget. The same report stated that the share of user fees for city funding for health in 2007 was roughly 17,8%. Eight facilities sampled in the Health System Assessment stated that they did not collect user fees. Furthermore, there has been little guidance on how user fees can supplement health facility budgets. During the HSA, 14 facilities (25% of all facilities responding to questions regarding user fees) were actually unaware of the existence of a policy for user fees. They stated that there was no clear policy. This is major challenge as the unawareness of the policy by the general public meant that no payments were actually made by patients hence no revenue income being received. Although government policy since the 1990s has allowed facilities to keep 100% of user fee revenue for their service provision, that does not appear to be a normal practice for a number of facilities visited during the Health System Assessment.

**This article was written by a group of students at the National University of Science and Technology. The students include Kudakwashe Gombarume, Arimokeng Swene and Takudzwa Alfred Tickey.

Policy Holder Protection Funds and Developing Economies.

The Policyholders Protection Fund (PPF) is an insurance compensation scheme established for the primary purpose of protecting the policyholders of an insolvent insurance company by paying them compensation for their unsettled claims according to Policy Holders Protection Fund (PPF) of Kenya (2013). A Policyholder Protection Fund is a compensation scheme created by an insurance regulation institution with the aim of protecting policyholders against any losses, in the event that the insurer becomes insolvent and wound up operations. The reasons for the establishment of the PCF are divided into two parts which include primary purpose of protecting the policyholders of an insolvent insurance company by paying them compensation for their unsettled claims and secondary purpose is to develop the insurance industry through promoting confidence by safeguarding the interests of policyholders and also advising the Government on insurance consumer protection (compensation) policy. Complementing the reasons for the creation of the fund they are conditions need to be satisfied for the setup of the fund.

Financial Services and Treasury Bureau (FSTB) (2011 pg.17) points out that, because of the long term nature of life insurance products, in the event of a life assurer’s insolvency, a liquidator can be appointed to facilitate the transfer of policies from the insolvent to other solvent insures. However, there might be an unlikely event where the liquidator fails to transfer the policies, then the life insurance scheme has two options. It can either continue the policies until expiry or provide compensation up to the set compensation limit or it can terminate the policies and pay the affected policyholders the cash value of the policies plus declared dividends or bonuses and it may pay ex-gratia payment having regard to losses arising from premature termination of the policy.

Reasons for the creation of the policyholder’s fund.

Protection of non-professional policyholders

The Policyholders Protection Fund (PPF) is an insurance compensation scheme for the primary purpose of protecting the policyholders of an insolvent insurance company by paying them compensation for their unsettled claims. Yasi (2001) pointed out that the primary objective of PPFs is to protect the interests of non-professional policyholders in the event of bankruptcy of an insurance company. The pooled funds are therefore expected to serve as the final safety net for policyholders. PPF will take over the protected element of policyholders’ claims and seek recovery from the estate of the insolvent insurer (FSTB, 2011). It is basically difficult to expect non-professional policyholders like individuals, to fully assess the financial strength and soundness of an Insurance company because there is a considerable amount of information asymmetry between such policyholders and insurers, the lemon problem, and the technical and complex nature of insurance companies than that of ordinary companies.

Maintain public confidence

Also, Choi (2013) postulated that the fund serves as a way of maintaining public confidence thus enhancing the goodwill of the firms contributing to the fund in the life and health insurance industry. PPFs can help to maintain the public’s confidence in the insurance business, thereby help to sustain a sound development of the industry. Non-professional policyholders do not only have limited ability to evaluate appropriately the financial soundness of insurance companies, but also they have little incentive to do so (Yasui, 2001). Because of the technical and complex nature of the financial situation of insurance companies, the cost of gathering sufficient information to make a wise decision is significantly high. Under this circumstance, each policyholder is inclined to rely on the efforts of someone else who engages in the same type of transaction.  Therefore, a good image portrayed will lead to an increase in the number of policyholders since they will have that confidence in their premiums that they are safeguarded. Empirically doubting minds towards the insurance service providers.

Creating Competitive markets

Moreover, the creation of the Policyholder fund will lead to the development competitive markets. Yasui (2001) once said PPFs prepare a smooth exit mechanism for incompetent insurers from the market, which supports dynamics in the marketplace. The failure of an insurance company affects policyholders significantly. They may be able to get insurance from another insurer, but the coverage could be more expensive and they also suffer financial damage as repayments during the liquidation proceedings could be substantially less than the face value of the claims. A policyholder protection fund can alleviate significantly the difficulties that policyholders might face in the event of the failure of an insurance company. Taking for instance Old Mutual in Zimbabwe is now incompetent, it may be outweighed in the market therefore this means it PPF will take over the protected element of policyholders’ claims and seek recovery from the estate of the insolvent insurer be facing a diverse type of challenges and one of them is liquidity, so if a fund is set aside by the government it may assist the company in paying up the obligations, and it may bounce back to the market. Thus a policyholder protection fund member will therefore be more competitive in terms of its reliability in meeting its claims in time, and the quality of the services it offers. Therefore, policyholder protection funds can serve to help develop dynamic and pro competition

 

Triggers investment

According to Kiyosaki (1997), investment refers to money committed or property acquired for future income. The rationale towards creating the policyholder protection fund is that it triggers investment in the economy. Section 179 PXIX of the Kenya’s policyholder protection fund (2B), “invest any of its surplus funds in securities which for the time being trustee may by law invest in, or in any other securities which the treasury may from time to time approve.” In the same insurance companies invest their premium incomes in securities and properties, the same can apply to these funds that would have been collected from several insurers in as far as investment is concerned. In the case such investments yield a return, it implies that the fund would grow and would mean more income in place to serve the purpose of protecting the policyholders. Thus establishment of life and health insurance protection fund may be justified by the fact that it may trigger investment and certain investments made through such funds may earn a return which might improve the liquidity of the fund as a whole.

Creation of employment

Furthermore, the fund creates employment. The formation of such a fund calls for employment of specialists whose task is to make sure that the fund is functioning well for the betterment of the insurance companies contributing to the fund. Intricate knowledge is needed in the surviving of the fund so candidates who are specialists would be elected, and as the market grows it means more employment is created also since the contributions would be high values also, therefore lowering levels of unemployment in a nation.

Conditions needed for the fund to be set up

Economic Conditions.

These refers to economic policies in a nation that might hinder or support the creation and the operation of the fund. The level of economic growth in an economy has also an impact on the fund in the sense that as the economy grows the fund also expands in terms of its investments and contributions, but in an environment where the economy is fluctuating and stunted growth has been recorded it becomes so difficult to create and operate the fund. In Zimbabwe with the present economic environment en-grafted with some harsh policies it might not be suitable to create the fund as of now, but maybe at a later stage when the economy stabilizes.

Level of Expertise in the field of Insurance

The level of expertise in the field of insurance is also an important determinant to consider when setting up a fund.  A board of personnel with relevant skills and expertise are employed to operate the fund for example accountants, fund managers, permanent secretary to the treasury, and treasurer. Complementing the skills and expertise already in the life and health industry, they are graduates that are being produced by universities for example in Zimbabwe, we have many graduates from various institutions for instance NUST and MSU. From section 179 of the Policyholder Compensation Fund in Kenya it points out that the minister will appoint a board of trustees of which these must be inclined with knowledge to manage the fund whose functions involve investing in various securities and receiving contributions from insures, grants provided by parliament and donations. So these trustees must have expertise. Therefore, in Zimbabwe with level of expertise in the insurance industry, it is quite a remarkable idea to set up the fund since people inclined with relevant expertise are available.

Also some people will be employed in the secretarial work and consultants.

 

Financial strength of the government

The financial strength of the government is also another factor to consider whether the compensation fund should be set up in Zimbabwe. Keah (2010) presented that the fund is a creation of the government. It is the government`s interest to promote insurance business by safeguarding the interest of policyholders. So the government will have to take part in funding the operations of the scheme from time to time. This will complement the funds which are paid by insurance companies. Keah (2010) also points out that insurers contribute to 25% of premium payable.

The government of Zimbabwe however is no position to set up a policyholder`s protection fund since currently it has no funds to do so. Its wage bill is standing at about 93% of all its inflows meaning that 7% or less will have to be shared into other sectors of which it is not enough. And in addition it has debts it owes to the World Bank and the IMF and also furthered by trade deficits and cash shortages in the economy.

So unless it’s financial or rather its cash flow statements improve the fund can be set up.

 

Administration of the fund and corruption.

If the policyholder protection fund is to be successfully implemented and operational, it must be run by a transparent and corrupt free administration and environment. A survey published by Transparency International (TI), Chimbganda (2015) ranked Zimbabwe number 150 out of 168 on the 2015 Corruption Perception Index (CPI). This implies that it might be somehow hard to have a transparent and corrupt free administration personnel in such a status quo. With this argument it makes Zimbabwe not to stand in a position to set up its own policy holder protection fund.

 

**This article was written by a group of insurance students at the National University of Science and Technology , Zimbabwe.

Pension Benefit Guarantee Corporation Running Out of Cash, Millions Affected

MishTalk

The Pension Benefit Guarantee Corporation (PBGC), an entity created to “guarantee” pensions of private corporations, is on the verge of bankruptcy.

Teamsters and other unions are poised to take huge pension hits. Previously, airline employees have taken a hit.

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How to reduce your insurance premiums

Johannesburg – According to the latest Momentum/Unisa South African Household Wealth Index, the ability of South African households to buy durable goods and repay their debts has worsened considerably over the past year.

The decline in households’ net wealth – which is the value of their assets minus their liabilities – means that a growing number of households struggle to maintain their current lifestyles and find it increasingly difficult to recover from unexpected shock expenses, such as the cost of medical treatment, a car accident or theft.

All of this means that insurance has an increasingly important role to play when it comes to ensuring your finances remain stable.

If you are battling to manage your finances and you miss a payment without meaning to, it is worth noting that, under the Long-Term Insurance Act, you are allowed a 15-day grace period within which to pay.

Mark van der Watt, CEO of Life Insurance Solutions at MMI Holdings, says that although the minimum grace period in the act is 15 days, many insurers (including Momentum) have a longer grace period (30 days).

“If you become disabled or die during the grace period, and your premiums were up to date otherwise, the claim will still be honoured.

“The premium will simply be deducted from the payment,” he says.

The same process would apply for your short-term insurance.

Gustav Jenkins, divisional director for product management at Liberty Individual Arrangements, says that although Liberty has a 30-day grace period before terminating the cover, in some instances the cover will only be terminated up to 55 days later.

Graham Craggs, spokesperson for Budget Insurance, notes that Budget Insurance offers you free premium waiver cover for six months if you are unable to pay your premium due to retrenchment or dread disease.

“This means your insurance premiums will be covered for up to six months, without your policy being cancelled, while you get back on your feet financially,” he says.

WHAT YOU CAN DO TO REDUCE YOUR PREMIUM

We rounded up some key advice from the industry on what steps you can take to reduce your premium so that you can save on your budget and maintain your insurance cover at the same time.

Short-term insurance:

. Revise your excess: An excess, or deductible, is the amount that you have to pay whenever you make a claim on your policy.

This amount is deducted from the total amount paid out from the insurer following a claim.

Increasing your excess is one way to reduce your premium.

It would, however, mean that a higher amount would need to be funded by you in the event of a claim.

It is then important to keep in mind that you would need savings or other funding to cover the increased excess if you need to submit a claim.

. Consolidate your insurance: There are often savings available through having all your valuable assets covered with one insurer rather than many.

Having car, household and building insurance with the same insurer typically results in a lower total premium.

. Adopt safer driving habits: Drivers who avoid dangerous situations on the road and abide by the road laws are less likely to be involved in accidents and smash-and-grab incidents.

These behaviours, which are gauged by the Momentum Safety Score, could lead to an annual cash-back benefit of up to 20% of your short-term insurance premiums, even if you claim.

. Increase your security: Your car, home or building insurance premium is calculated based on your risk profile.

Craggs says your risk profile is based on a number of things, such as where you live, the type of car you drive and the security measures you have in place.

“You could reduce your car insurance premium if you’ve fitted your car with additional safety features such as a tracking device or an alarm, for example.

“Similarly, you could receive a reduction on your home insurance premium if you’ve invested in an alarm system for your home or if you’ve moved to a safer neighbourhood,” he says.

Long-term insurance:

. Rewards programmes: Life insurers are now prepared to reward you for exhibiting behaviour that reduces their risk.

For example, if you are active and healthy, you are less likely to get sick or die from health complications.

Van der Watt says Momentum Multiply clients can qualify for life insurance premium discounts of anything from 5% to 60%.

. Revise your premium payment: Look at different ways to pay for your cover.

For example, instead of paying a level premium, you could choose a premium that increases every year (for example, by 5%). This makes premiums more affordable in the short term.

If you choose this route, ensure that premiums do not become unaffordable in the future (especially if increases are greater than inflation).

. Revisit loadings: If you had a loading or an increased premium on your policy as a result of health conditions or dangerous pursuits, you could approach your insurer to reconsider the premium if your health has improved significantly or you no longer take part in the dangerous hobby.

. Healthy lifestyle: Smokers are generally charged more for life insurance than non-smokers.

If you smoked previously and have since stopped, insurers often reduce the premium (as long as you haven’t smoked for a specific period, for example six months).

Premiums for smokers can be significantly more expensive.

 

Written by Neesa Moodley.Neesa Moodley has been a financial journalist for the past 12 years.

Keep those varsity blues at bay

Typically, a student’s laptop could cost anything from R4000 to R23000, a tablet between R1000 and R9000 and a smartphone between R1300 and R11000.

“Textbooks can set a student back up to R7000 per semester. And many students travel by bike, an inexpensive mode of transport – except for the set-up fees, which can go as high as R20000, depending on the model,” says Attie Blaauw, personal lines underwriting manager at Santam.

And no matter how extensively a house is covered, electronic equipment or any possessions that are “on the move” will not typically be covered by your insurance policy, he says.

“The premiums of a household insurance policy are determined by how secure the house is, for instance whether it is in a secure estate and whether the property has burglar bars, etc. As soon as the equipment is off the primary residence premises, it needs to be insured differently,” he cautions.

So how should a student’s possessions be insured?  

Mandy Barrett of insurance brokers and risk advisers Aon South Africa, says there is a common misconception that the contents of students’ residences are uninsurable because this is regarded by insurers as a “communal area”, and therefore presents a much higher risk.

“While this may be true in some cases, particularly with off-the-shelf, commoditised types of insurance products, it’s quite possible to arrange affordable cover for these risks linked to your household contents or vehicle cover. However, you can expect this cover to be subject to certain insurer restrictions such as forcible and violent entry,” she says.

Barrett points out that a potential pitfall to watch out for is where the value of an item specified in the policy is not listed at its replacement value. “If this is the case, you could find the insurer only partially pays out in the event of a claim on the basis that the item was underinsured,” she says.

A good practice is to make photocopies of receipts for high-value items such as laptops and bicycles so that you have an electronic copy of your proof of purchase. Bear in mind that the replacement costs are likely to escalate over time and the replacement values on your policy should be updated each year to allow for inflation.

Remember that while your insurance premium may increase slightly to cover specified items, it is well worth it when it comes to claim time and avoiding costly repair or replacement charges.

Car insurance

If your child is fortunate enough to drive a car, it is important that the insurance policy on the car specifies that the child is the regular driver. Blaauw notes that this applies to children who live at home and drive to campus daily as well as those who live on campus.

This is particularly important because if the regular driver is not correctly or truthfully declared in your insurance policy and a different individual who drives the vehicle regularly is involved in an accident, your claim may be rejected or not paid in full.

“When it comes to insuring a student vehicle, make sure you have cover at least for balance of third party, fire and theft, with perhaps additional personal liability top-up cover, given the risk of major claims in the event of an accident or incident where the young driver is proven to be negligent,” Barrett says.

Nthabiseng Moloi, head of marketing and brand at MiWay, agrees, saying that if you have failed to correctly specify the regular driver on your car insurance policy, the insurer has the option to void the cover as though you never had a policy in place. This is because the incorrect information means that your risk cover was incorrectly assessed and you would have been paying the incorrect premium. While it might be tempting to choose this option so that you have a lower premium, it is not worth the risk of losing your cover entirely.

Written by Neesa Moodley.Neesa Moodley has been a financial journalist for the past 12 years.

Zim Insurance firms continues to bleed.

HARARE – Zimbabwe’s insurance sector continues to make losses despite raking in millions of
dollars every year due to deteriorating economic conditions, a new report has shown.
A third quarter survey conducted by the Insurance and Pensions Commission (Ipec) revealed that life insurance firms recorded a 46 percent decline in profits from $69 513 in the nine months to September in 2015 to $37 750 in the same period this year.

This was despite the insurance companies having wrote net premium of $257 million in the period under review, which was six percent growth from $243 million last year.
“Total costs were $219 million resulting in a combined ratio of 85 percent, a 14 percent growth from the same period last year,” Ipec said.
The insurance regulator noted that total assets regressed by two percent from $1,557 billion last year to the current $1,527 billion reflecting investment losses by players due to the challenging operating environment characterised by low liquidity.

This comes as the country’s insurance sector has been ravaged by an accelerating economic
decline, with statistics indicating that long-term insurance has a penetration rate of less than 4,1 percent, one of the lowest in the region.
The industry’s growth is coming under increasing pressure from shrinking disposable incomes, which have been affected by company closures, high unemployment and a tightening liquidity.

Market experts say companies that have survived the deteriorating operating environment have shifted focus to more pressing survival needs than paying insurance premiums.
“The decimation of the industry, which intensified following the switch to dollarisation in 2009, has deepened, with quarterly cancellations in the life business averaging 37 percent in the past two years,” said an insurance expert with a local financial institution.
“The development portends gloomy prospects for the struggling economy, as it demonstrates
worsening hardships for the few who could still afford insurance cover to cushion themselves
against the adverse financial consequences of premature death for dependents in the absence ofgovernment social safety nets,” he added.
Information gathered by the businessdaily shows that the crisis that saw the demise of more than 6000 firms between 2011 and 2015 has undermined the insurance industry’s vital role for mobilising savings for the economy, whose ripple effects have already been dire.
The Organisation for Economic Co-operation and development (OECD) says life insurance assist economic development in general and development of financial markets in particular.
Bolstered by their ability to pool financial resources through policy holders, insurance companiesare able to amass large quantities of funds that are important in supporting investment and national economies.
But the spate of policy cancellations has now piled more pressure on the industry in which smaller players are already on the receiving end.
Meanwhile, Ipec has urged insurance firms to invest in prescribed assets, treating customers fairly and ensuring that insurers start effective ground work to prepare for the imminent introduction of a solvency directive currently under consideration.
“Insurers are further encouraged to embrace effective risk management systems, corporate
governance, effective pricing models and effective ICT systems to ensure sustainable and
profitable business growth,” the insurance regulator added.

This article was realesed by DAILYNEWS 5December 2016.

You can read it on the following link:

Insurance Firms Continue to bleed.