Omega Ukama 
THE Insurance Council of Zimbabwe (ICZ) says government and companies involved in big projects are prejudicing local insurers by outsourcing foreign insurance cover.
Luke Ngwerume, ZimSelector’s managing director
This comes as the growth of the industry has been subdued amid low penetration due to Zimbabwe’s persistent economic woes.
The country’s insurance penetration rate is estimated to have declined further to 2,9 percent from 4,7 percent following the rebasing of Zimbabwe’s gross domestic product last year from US$16 billion to US$25 billion.
“Externalisation of cover by some big corporates is a big problem in this market,” Nicholas Sayi, the Insurance Council of Zimbabwe’s head of operations told journalist at a workshop in the capital recently.
“What happens is that they say the market cannot cover that risk and it is externalised. National projects should be insured locally and exports should be insured locally. As the short term insurance industry, we are advocating for such strategic policies that ensures we are a robust industry are adopted,” he said.
David Nyabadza, NicozDiamond Insurance’s managing director, said the relevant authorities should consider what the law says about externalising insurance business.
“The law states that all risks that originate in Zimbabwe should be insured locally. We are not really lobbying for anything, we are simply asking that we comply with the law,” he said.
“The authorities have allowed or given a dispensation for those projects to be insured outside the country and we just see it happening and the local industry does not benefit.”
A common argument has been that local companies do not have the capacity to underwrite the “big business”, which normally comes with big projects.
“It doesn’t necessarily mean that we have the capacity to do everything here but what we are saying is that policy should be followed and whatever can be retained locally is retained. We then do not have to waste foreign currency putting it out there,” Nyabadza said.
He added that the local industry would also benefit from working on high profile projects.
“The other more important thing is that if an entity is offshore it means that the Insurance and Pensions Commission (IPEC) cannot regulate it because it is outside the country. In that case, if something happens it will be difficult for us to get a resolution,” he said.
Luke Ngwerume, ZimSelector’s managing director, noted that bigger projects usually involve foreign counterparties who bring in the capital and often require insurance of their choice.
The financial services aggregator firm’s boss, however, said the authorities should “go out of their way to try and negotiate space for local players” in the major projects.
“I think it just makes sense because ultimately these big projects give a one-off opportunity for the local industry to grow significantly to become more meaningful in the scheme of things otherwise we will never be able to carry risks for these huge projects,” he said. newsdesk@fingaz.co.zw
