‘Insure national projects locally’

INSURERS say government should localise all or at least some of the insurance on national projects to support the local industry.
Even though the law states that all risks that originate in Zimbabwe should be insured locally, players in the industry complain that government and companies involved in big projects are prejudicing local insurers by outsourcing to foreign companies.
“An area that we wish to bring to the attention of the government is the area of fiscal projects, of which the insurance is externalised,” Phillip Mtasa, Capitol Insurance’s chief executive, said last week at an industry engagement meeting with government.
“This is an area where we can have exponential growth of our market because many of the national projects in Zimbabwe are not insured locally. Speak of roads, energy, water, all these massive projects.
“The capacity is there, and the Act says Insurance should be localised, but somehow these contracts come with clauses, which provide for externalisation,” he said.
It comes as the local industry has been subdued amid low penetration due to Zimbabwe’s persistent economic woes. The Insurance and Pensions Commission (Ipec) estimates the country’s insurance penetration at between two and three percent.
It also comes as the Insurance Council of Zimbabwe (ICZ) has said “externalisation of cover by some big corporates is now a big problem in this market”.
David Nyabadza, NicozDiamond Insurance’s managing director, said outsourcing also raises regulatory issues because Ipec does not have authority over foreign entities.
“In that case, if something happens it will be difficult for us to get a resolution,” he said at a business conference recently.

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