adminTaurai Craig Museka
PICKING an insurance company can be very difficult especially considering the financial crisis of the early 2000s. Since dollarisation a number of insurance companies have either been suspended or had their licenses cancelled by the regulator of the insurance sector, the Insurance and Pensions Commission (IPEC).
However, you should not panic because of this. Getting knowledge on your insurance company can save you from insuring with a sinking insurance company. Insurance expert Mr Luke Ngwerume says a lot of people make a mistake of over trusting their brokers and fail to understand who they are really insured with.
It is important to note that brokers do not carry risk and therefore are not the ones who pay claims. If they choose a wrong company for you, it is you who suffers the losses. There are various ways to help you consider which insurance company to use or reject if a broker chooses for you.
Just like banks, insurance companies are required by the regulator IPEC to have a minimum level of capital to operate. These requirements are in place to make sure insurance companies do not become insolvent. The regulator monitors assets that are readily available to meet claims by conducting offsite surveillance and onsite inspections. Companies that are found to be non-compliant are either suspended from accepting new business or have their licence cancelled.
IPEC provides quarterly reports (which can be found on ipec.co.zw) with this information which you can use when choosing an insurance company. It is wise to choose a company that has capital levels above the minimum requirement and avoid those with capital lower than the required. Although it might seem tedious and unnecessary you should make it your priority to check this information before making a choice on an insurance company. If you are already insured you can also check your current insurer to enable you to prepare for renewal or transfer.
If going through reports to check capitalisation of insurance companies is a huge task for you, quality ratings will simplify it. Agencies such as the Global Rating agency use various methods to assess the claims paying ability of insurance companies. They give an independent opinion of a company’s ability to meet policyholders obligations based on various factors such as the country and industry environment, business profile, competitive positioning, product distribution, earnings diversification and profitability to mention a few. However, not all insurance companies subject themselves to these rating agencies.
A company that does though shows their commitment to providing assurance for their policyholders. Mr David Muchakagara, general manager at Old Mutual Insurance Company says they pride themselves for having a Global Rating Agency Claims Paying Ability of A+ which is the highest rating. A requirement by IPEC to have all companies to be rated would be a good move for the protection of policyholders.
Reputation of the company
I was on Facebook the other day and I was saddened by comments I saw on one of the most popular insurance company’s page. From people saying the insurance company is a joke to people pleading to the regulator to investigate the company, it was just disheartening. You MUST avoid a company with a reputation of not paying claims. Before choosing your insurance company, take time to investigate them. Go to their social media pages. Ask colleagues.
Ask friends. You can even ask IPEC or the Insurance Council of Zimbabwe about the number of complaints they get about certain companies. GO for the companies that have a good record.
Proximity, availability and flexibility
Although we now have various methods of distribution of insurance products, it is dangerous not to know the location of your insurance company. I had a friend who took insurance with an insurance agent and only discovered after an accident that his premium payment never reached the insurance company.
It is best to make sure that your agent or broker is committed to giving your risk to capable hands for example zimselector.com promises to work only with capable insurers. Knowing where your insurance company is located or even their contacts will help you confirm is you are really covered. If you are an individual or you run a business an insurance company should be ready and available to meet with you to explain their covers and promises.
Premiums charges
The competition in the insurance industry has led to a few company charging premiums that are not cost effective. You as a policyholder should make an effort to know the required minimum premium for certain classes of insurance. If an insurance company charges less it means they will probably fail to honour their obligations if you incur a loss. You ought to know if your insurer is charging cost effective premiums. No matter how big you assume your insurance company is, take time to know and understand them. Do not let a lion babysit your antelopes. If you trust the wrong insurance company with your assets you are in for a very big disappointment.
Article by Taurai Craig Museka a freelance insurance writer. Send feedback to [email protected] or WhatsApp +263775608014
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