adminpensioners and insurance policyholders and despite widespread public calls to pay up rightful pension and insurance benefits.
More categorically, insurance companies have to date ignored very specific pensioner and insurance policyholder claims made against them by organisations such as the Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT) — these claims being made on behalf of the organisation’s pensioner and policyholder membership.
If the basis of the claims made by ZimPIRT on behalf of its membership is valid, charges against insurance companies would range from errors in benefits evaluation, to outright fraud.
But what gives insurance companies the courage to essentially continue to ride rough shod over pensioners and insurance policyholders, and what are the effects of the continuance of this standoff?
The treatment of claims made against insurance companies in this stand-off can provide clues to how insurance companies may be acting irresponsibly, as evidenced by their reticence. On its part, ZimPIRT is already approaching insurance companies as highlighted earlier, but only to be meeting the cowboy style treatment.
Undeterred, ZimPIRT has, and is proceeding to make appeals to the Insurance and Pensions Commission (IPEC), the regulator of insurance and pensions operations in Zimbabwe.
This is another step towards holding insurance companies to account, for any valid pension and insurance benefit claims. In so making this appeal, ZimPIRT expects IPEC as the regulator, to urgently execute its key regulatory role to protect consumers of financial services — in this case consumers of pensions and insurance services.
IPEC still has to demonstrate that it stands ready and capable of protecting these consumers, whenever the appeals are valid.
Judging by the public noises made in the media and elsewhere, IPEC as the regulator must certainly have received several appeals from pensioners and insurance policyholders to intervene on their behalf.
Several ZimPIRT members have informed the organisation of having made these appeals to IPEC.
So in fact, some strategies have actually been set in trend to bring insurance companies to book and that insurance companies may have ignored all of them.
Unfortunately, it appears like IPEC has acted in support of insurance companies, as it has to date not acted urgently in fulfilment of their role to protect these consumers against insurance company potential institutional lawlessness.
Even more unfortunate, the Minister of Finance, ultimately responsible for IPEC, gets dragged in, as party to this inaction by IPEC. Is it possible that insurance companies cowboy style treatment of pensioners is perpetrated in the full knowledge that IPEC and the Minister of Finance will not act?
What has not featured in all this are
the macro-economic effects of the stubborn refusal by insurance companies to pay rightful pension benefits, and the inaction by both IPEC and the Minister of Finance.
Apart from pensioner destitution, the pensions stand-off has severely corroded public confidence in the fitness of insurance companies and their management to serve as custodians of monies invested in pensions and insurance vehicles.
Public confidence corrosion, can on the face of it, be evidenced by the negative public perceptions of insurance companies. By implication, the public may now not trust that IPEC, as the regulator and the Minister of Finance are serious about, (and/or capable of) protecting the potentially prejudiced pensioners and insurance policyholders.
This corrosion of public confidence, turns out to be a direct measure of the minister’s capability to properly undertake the job to ensure that the financial system is efficiently performing its established roles, to keep the economy on a sustainable economic growth path. Key roles of the financial system include providing efficient mechanisms of transferring economic resources through time and across geographic regions and industries; to provide efficient mechanisms for the pooling of funds to undertake large-scale indivisible enterprise; and to provide effective methods to manage uncertainty and to control risk.
Insurance and banking systems in a given economy are key to this financial mediation role. The minister must set effective corporate governance, risk management and other macro-economic policies that ensure financial system roles are executed efficiently as insurance companies transact with the public.
The diagram on Page B5 illustrates how insurance companies should transact with the public, in the process driving economic growth. Such a smooth flow of funds that ensures pensioners are entitled to the real value of their investments in insurance companies induces what is referred to as “deepened” financial markets.
A key condition for the insurance system and hence insurance companies to execute this macroeconomic role is the existence of public confidence that insurance companies, can continue to serve as a store of real value for their money. That confidence can seriously be corroded by ineffective corporate governance and risk management policies that allow wide scale denial of valid pension and insurance benefits, such as insurance companies could be doing currently.
The refusal translates to breaking the main link from households to firms or businesses, via the financial services sector, as depicted in the aforementioned diagram. In reality and practice, this occurs as insurance companies steal from the public (the households) and stop the intended flow of money, much like what could currently be happening.
Financial markets “suppression” or (bluntly) economic sabotage, occurs when funds from households cannot be circulated (or be intermediated) effectively in the economy to drive economic growth, and when media houses collude with insurance companies to cover up such fraud.
IPEC and the Minister of Finance are duty bound to act, firstly to protect pensioners and to ensure that funds in the insurance system work to drive economic growth.
- Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, [email protected]; telephone; +263 (0)4 883057; Mobile; +263 (0)772 889 716. Opinions expressed herein are those of the author and do not represent those of the organisations that the author represents.
Online Reporter