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THE insurance sector says it is being prejudiced of millions of United States dollars because foreign investors are coming in with their own cover at the expense of local providers.
Some investors, mainly in construction, marine and mining sectors are bringing their own insurance when they come to Zimbabwe despite local insurance companies having the capacity to insure them.
Insurance Council of Zimbabwe (ICZ) chief executive, Tendai Karonga last week told NewsDay Business that they are requesting the government to introduce a law compelling investors to use local companies for their insurance needs.
“I will pick one example of the foreign contractors that come to build here in Zimbabwe. When they come they bring their own insurance. What we want is to encourage the government to introduce a law that will compel these people to exhaust local capacity before considering external insurers. I can’t give you a figure, but it runs into millions of dollars that we are losing out on. It’s not only contractors; it also includes marine and mining insurance. We want them to use our capacity and not for them to come with their own,” Karonga said.
Karonga insisted that the local market has adequate capacity to deal with threats in the insurance sector.
“Locally, there are sectors that are regarded as very risky by some people like mining risks. We believe that the local market has a high capacity to deal with those risks,” he said.
“We are looking at how we can reduce the tendency to rush outside for insurance. We are carrying out studies on the levels of capacity that we have so that we come up with exact figures of what we are losing. We have already established that the capacity is there,” he noted.
Although the Insurance and Pensions Commission statistics indicate the local sector’s capacity, Karonga believes there is need to revalue and determine the local industry’s actual levels of capacity.
“We need to look at what we call reinsurance treaties. These provide what we call capacity in the local market, but re-insurers get their capacity from what we call retrocessions outside the country. The aim is to examine if there is optimum capacity for the local industry. We need to see whether we are fulfilling our task to provide protection and whether we are able to take on higher risks in the market. We need to look at the whole chain,” Karonga added.
Whenever insurance players want to externalise risk they are supposed to seek approval from the regulator after having circulated a market slip that establishes whether there is no one in the local industry with the capacity to take up that risk. AMH
