adminCollin Banda
AT the beginning of this month, most car owners renewed their motor vehicle licences and one of the documents needed to be licensed is valid insurance.
During the period, which has now become popularly known as renewal time, one of the most common features at strategic points that renew the licences in cities is that of people on the road selling insurance products.
This has been a growing phenomenon over the years and this article seeks to try and assess the impact of this move by insurance companies on their image, credibility and that of the industry as a whole.
Insurance as a concept, globally, has generally taken time to be understood, let alone be accepted and appreciated.
It is a concept that, like one economist once said, takes ‘‘appreciation to be appreciated’’.
Confusing statement indeed but let me try and delve into it a bit so as to shed more light.
Just like you might not see the importance of anti-retroviral drugs if you are not HIV-positive, the same goes for insurance if you are not at risk.
But what most people do not know is risk is inherent in our lives. Just like we need to breathe to live, we need insurance to achieve a peace of mind and be able to achieve our different goals and objectives.
Risk is imminent, it can be eliminated but as an entrepreneur I have come to realise that the most profitable things come with a risk.
And that risk is the spice of life and the fuelling factor to profitability.
Even in our day-to-day lives, everything we do, involves risk. There is a possibility in every passing minute that you might not breathe again.
A possibility that when reversing your car from your garage, you might hit your gate and scratch the car. Risk is everywhere. In simpler terms, where there is life, there is risk. If this was a Bible and there was an eighth day, this would be the perfect time to say, ‘‘And in light of all this risk that was inherent in what He had created in the past six days, God created insurance’’.
Insurance comes in to help transfer this risk from those that are exposed to it to those that can manage it, these being your insurance companies, re-insurance companies, banks, asset management institutions, just to mention but a few. In Zimbabwe, the insurance industry was badly crippled by the economic woes of 2007-2008 which saw many people lose a lot from insurance and what they had invested.
This resulted in people losing confidence in the insurance sector but mostly they lost the value of insurance.
Over the past five years, insurance companies and the regulatory body have tried to paint the true picture of what insurance is and how it operates and l must say, hats off to those who have been at the forefront of this renewal and ‘‘branding’’ of the industry. Although things are not where they are meant to be, insurance companies have tried to instil confidence in the prospective insured and have laboured to give a transparent and tailor-made product and service that suits the needs of the Zimbabwean citizen.
Given the tight market conditions and the not-so-favourable economic conditions, insurers have been left with no option but to engage in vigorous competition that has seen them try and lure customers by using various marketing strategies like reduced rates, offering tailor-made products and of late, selling insurance on the street.
The latter is my point of assessment; what impact has this had on insurance in Zimbabwe. The following positives can be drawn. The selling of insurance on the street has resulted in:
1 Easy accessibility — Access to insurance has been made easy as these different products are now available on the street and to everyone who desires to purchase them.
2 Insurance explained at a personal level — The sale of insurance on the street has a personal touch to the insurance contract which sees insurance concepts, terms and conditions and even terminology explained so that the prospective insured gets a better understanding of insurance.
3 Cost of insurance reduced — Selling insurance on the street tends to reduce costs for insurance companies. These costs range from day-to-day operating expenses on salary and rentals.
4 Fear of the unknown eliminated — The personal touch, explanation and street services reduce and eventually eliminate the ‘‘fear of the unknown’’ that usually possess prospective insured’s regarding insurance and insurance products.
5 Insurance 2.1 — updated version — The world is rapidly changing and so things have to be kept in line with time and the demands of consumers. Selling insurance on the streets can be seen as a move to keep up with time. If people are taking time to come to you, why not go to them?
In light of all these positives that can be drawn from selling insurance on the street, I think it is befitting for us to look at the other side of the coin. What impact has taking to the streets had on our insurance industry and how has the industry been affected?
Is it really a good move given the state of our industry and the lack of confidence people have in it? (I have taken to the streets to do this research and will provide you part two which will have the conclusion of this research).
Collin Banda is a Part 3 student at the National University of Science and Technology. He is furthering his studies in Risk Management and Insurance and believes there is still a lot of work to be done in this industry as it also has a pivotal role to play in the rebuilding of the country’s economy. He can be contacted on 0774 561 899 or [email protected] <mailto:[email protected]>
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