ESTHER MSETEKA, Lusaka
PARLIAMENT is soon expected to repeal the current Insurance Act to boost the sector, which only contributes about two percent to the gross domestic product (GDP), Minister of Finance Felix Mutati has said.
The revocation of the Act has been necessitated by the continued reinsurance of premiums out of the country as the sector is incapable of undertaking huge risks, resulting in Zambia losing over US$1.5 billion in premiums between 2009 and 2015 due to loopholes in trade.
The 2013 Insurance Act is a very progressive document which contains issues of improved governance of the sector, recognises micro-insurance as a separate insurance category and expansion of the intermediary service providers, among other things.
In an interview on Tuesday, Mr Mutati said the sector’s input to GDP, which is the monetary value of all the finished goods and services produced within a country’s borders in a specific period, still remains very low.
“At the next sitting of Parliament, we are bringing the repeal of the current Insurance Act and to have a new law. We have seen that the insurance sector’s contribution to the GDP still remains low at below two percent.
“One of the reasons for repealing the Act is that the bulk of the insurance premium is being shipped out because the space of insurable assets in Zambia is very narrow,” Mr Mutati said.
Government intends to use the new law to encourage the public to take up cover as a safety net measure in case of a tragedy.
Mr Mutati urged sector players to continue rolling out consumer education initiatives to increase the level of insurance penetration as a method of reducing poverty and to contribute to economic growth.
“Traditionally, as Zambians, we only react after an event [calamity] has occurred. We do not take insurance to prevent and respond to an event. But remember [that] it pays to insure just like it pays to remit taxes,” he said.