ESTHER MSETEKA, Livingstone
MINISTER of Finance Felix Mutati has advised players in the insurance sector to run the industry as an economic engine that can significantly contribute to the country’s gross domestic product (GDP) and not as a “gambler segment”.
And Government will support the enactment of the new Insurance Bill to enable the industry to double the GDP contribution to the economy to more than 1.5 percent.
Mr Mutati said this here yesterday when he officiated at the annual insurance conference held under the theme: ‘Bouncing back from hard times’.
He said Zambia’s insurance sector has enormous potential to grow but the industry has been “possessed with undercutting instead of underwriting as a business model”.
“You have developed a business model that focuses on saying I am going to chew and hoping that the risk that I take as an underwriter does not happen, so you are taking and chewing a bit more and you have perfected gambling as a way of running the sector. You are not gamblers and such a business model is not sustainable but equivalent to witchcraft!
“So we have to find a way of disconnecting you [insurance players] from gambling and witchcraft. We also have to find a mechanism of ensuring that we minimise on the exports of premiums. We are behaving like a post office of collecting and passing on,” he said.
Mr Mutati said the inability to meet payments by some insurance firms when claims are made is very discouraging as this hinders the uptake of cover by consumers.
He challenged insurers to create confidence in the industry by meeting their clients’ claims.
Insurance Association of Zambia president Paul Nkhoma said the sector becomes the worst affected whenever there is turbulence in the country’s economy.
Mr Nkhoma said the theme for the conference signifies the industry’s resolve to generate ideas that guarantee a stronger and more viable sector after the economic downturn.
He said the industry acts as a stabilising effect to the economy as it helps other sectors to quickly recover from a recession.
“We as an industry have a duty to deliver solutions to the various sectors of the economy and our people. The insurance industry continued to contribute less than 1.5 percent to the country’s GDP with the total industry premiums standing at only K2.6 billion in 2016,” he said.
Mr Nkhoma said the industry has continued to push for the domestication of marine insurance which led to the loss of K200 billion annually in potential marine premiums.
And Pensions Insurance Authority (PIA) registrar Martin Libinga said the authority had been working on micro insurance regulations which could not be issued because there is no enabling provision in the current Act.
Mr Libinga said the authority is working with other stakeholders to develop the provisions of micro pensions to help people save for their retirement.