adminthat could see it becoming a US$30 billion economy in the next 20 years.
Addressing delegates at the annual Insurance Institute of Zimbabwe conference in Bulawayo, KM Solutions chief executive Mr Kenias Mafukidze said in line with this anticipated growth, the insurance industry has the potential to expand.
“We have just come out of the hyperinflationary era (and) this is the time to make some serious (innovative) decisions,” said Mr Mafukidze.
With the use of relatively stable currencies, Mr Mafukidze said the industry needed to make long-term plans as opposed to “thinking of the next day” as was the case during the hyperinflationary era.
He urged insurance firms to do away with unethical behaviour that characterised most businesses during the hyperinflationary era, warning that if companies remained entrenched in unethical business practices, most of them were likely to fold.
“I can promise you that if we (continue with the same old thinking), in the next 10 years only two or three of us would be around,” he said.
Mr Mafukidze also explained measures that the insurance firms could adopt for sustainable growth and sustainability of the industry.
These include introduction of new skills. Mr Mafukidze noted it was not feasible to expect managers or chief executives who ran the companies in the 90s right through the hyperinflationary era to come up with new strategies to drive businesses.
In addition, the industry needs to consider possibilities of mergers and acquisitions. Other factors, he said, included value-addition and coming up with strong brands that can withstand challenges.
Speaking during the same occasion, the Commissioner of Insurance and Pensions, Mrs Manett Mpofu, who addressed the issue of risk-based capitalisation called on insurance companies to go beyond their minimum capital requirement to adequately cover their risk.
This was critical as some companies were undercutting on premiums, which placed them at risk of failing to settle claims when due. Mrs Mpofu said while her organisation was ready to punish the perpetrators, they required ample proof before they can act.
But their efforts were being frustrated by insurance companies that were working in cahoots to cover up such incidents.
“This is not helping the industry as it is actually putting it at risk,” she said.
She said her organisation was in the process of implementing Solvency II that will result in greater disclosure by insurance firms, tighter monitoring and an upward review of minimum capital requirements.
A committee has been set up to look at the implementation modalities.
Mrs Mpofu urged the IIZ to ensure that they come up with tailor-made products and courses that are linked to the new system.
Mr Kimani Mwenga of Kenya, who presented a paper of insurance fraud and its effects on the sector, called on delegates to be on the lookout as this had serious impact on the sector worldwide.
Citing Kenya as an example, Mr Mwenga said as much as 40 percent of claims were fraudulent with the health and motor insurance facilities being the hardest hit. He said consequences of insurance fraud included closure of companies, higher premiums, lack of trust among insurer and low penetration rates.
In order to mitigate against fraud, Mr Mwenga said insurance companies need to establish a database and profile of claim types, engage in moral underwriting, identify differences through due diligence and employing competent staff.
In addition, he said, they should also institute internal controls with audit oversight, using technology, employing data analysis models as well as advocating for tougher laws against perpetrators of fraud.
The IIZ conference is being held under the theme “Insurance – The Diamond for National Growth in Zimbabwe and Beyond”.
Online Reporter