Business

Low reserves affecting insurance firms

ESTHER MSETEKA, Livingstone
INSUFFICIENT reserves by some insurance companies are negatively impacting on their ability to settle claims on time, ZEP-RE head of business relations and country manager for Zambia Shipango Muteto has observed.

Mr Muteto, who is also immediate past president for the Insurers Association of Zambia (IAZ), said there is need for industry players to boost their balance sheets through the collection of more premiums.
He said in an interview to journalists on the sidelines of the just-ended IAZ annual conference held under the theme, ‘Bouncing back from hard times’ that a stable entity has the capacity to take on even bigger risks.
“There is a balance between premiums that are collected by insurance companies. Creating sufficient reserves will help companies pay claims and be able to meet management of expenses.
“Premiums collected should be in a firm’s account and not sitting as debtors because the issue of debtors and insufficient pricing will result in low collection of premiums. This therefore creates insufficient reserves from which insurance companies can pay claims,” Mr Muteto said.
He has since advised insurance companies to price the services and products according to the risks to enable them manage claims and build confidence among consumers.
“When you are offering a price for a risk as an insurance company, the way you will price a mining risk, for example, and that of an office block for the same fire insurance will be different because of the nature of activities that take place between these two.
“The mine is more prone to accidents while the office block is not highly exposed, so the price value will be different,” Mr Muteto said.

 

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