The Sunday News
Collin Banda Economic Focus
THE biggest challenge many developing countries face today is trying to develop their economies so that they become close to benchmarks set by those countries that are classified as developed.In order to live up to this challenge, most Governments direct their efforts towards obtaining and maintaining this sustainable growth and development to ensure a better standard of living for their people.
The insurance industry has positioned itself as key in providing services aimed at giving security to industries against the various risks inherent in their operation. We can see that insurance started thousands of years ago but still it is at the preliminary stage as compared to the banking industry.
It appears that people are not patronising insurance in Zimbabwe and Africa as a continent, due to several reasons.
There is not enough education about insurance as some people see it as a cheat on society.
Some people feel reluctant to go for insurance because when they see the kind of stress others go through before claiming, they feel discouraged.
Another reason has also been that the insurance activities are directed mostly to the monthly income earners and Government workers leaving the unemployed, uninsured.
The selling of insurance on the street has brought with it mixed feelings from consumers and other players in the industry.
Talk about adding insult to injury. There are many principles on which the insurance contract is founded and I have come to believe that one of the most important is trust.
Not just trust, but mutual trust. Different from other sorts of contract, to me, the insurance contract is a relationship.
A relationship which ceases to be healthy when that mutual trust is lost.
The primary objective of this article was to find out the impact of selling insurance on the streets.
In Part 1 of this article, I touched on the few merits that can be drawn from the move by some insurance companies to sell insurance on the streets.
Picking things up from where we left in the first instalment, the question still remains, is it really a good move for insurance companies to sell insurance on the street given the state of our insurance industry?
Let us wind back about six years ago. During the hyperinflationary environment, most companies in various sectors of the economy lost trust among their clients. The insurance industry was also not spared.
Furthermore the de-industrialisation of Bulawayo has negatively impacted on the sector.
The closure or relocation of more than 100 Bulawayo companies employing some 30 000 people has had a negative impact on insurance companies. The economic challenges faced by most companies in the city had compelled them to view insurance as a luxury rather than a necessity thereby reducing business opportunities for the sector.
What is perhaps sad is that at a time when there has never been more insurance advertising, much of it drives price first and foremost, with features and sometimes service then coming in a distant second.
Undercutting thus has now become a big issue in our market. But let us not forget that insurance products must be competitively priced so that when a disaster or catastrophe strikes, the insurance company is able to pay claims.
The fact that things are not well in the economy does not mean that as insurance providers we have to compromise on the quality of the product so as to survive.
It is pleasing to note that though there has been a gradual improvement in trust levels in the insurance industry since the adoption of multi-currency system in Zimbabwe. Let us therefore not draw ourselves back again by using methods and tactics that are short-sighted. Surely one cannot possibly buy insurance cover the same way you buy airtime or even tomatoes on the street. Tomatoes are even better as they are sometimes wrapped in newspaper and put in plastics. (This I say in reference to some insurance products that are passed from hand to hand on the street corners).
We cannot deny that companies in this industry are facing challenges and therefore we should focus on what we should do to try and survive and ensure the continued growth of this industry.
In a recent survey carried out in Zimbabwe among insurance consumers, a clear message has been given that despite all the advertising and hype, there remains a serious lack of trust in insurance providers.
- Over 70 percent believe that insurance providers make the terms and conditions in their policies deliberately complicated.
- Half believe claims are never paid out fairly.
- A third believe that insurance providers expect them to lie about a claim.
For the insurance industry, there is thus a need to invest heavily in awareness campaigns and redirect efforts in creating innovative products that meet ever-changing clients needs.
Players in the industry have to be innovative and introduce smaller premiums to enable cover for those who are marginalised and insure those people that were previously considered uninsurable.
It is high time that as an industry we create what is called “insurance for the Zimbabwean”.
Let us tailor make our products so that they address the exact needs that our consumers have. Let us move away from the desk and go out there and find out what really people need and expect from insurance. That is the only way our industry can go.
We definitely cannot sit back and wait for the economy to recover so that our industry recovers as well. This has been the song among many players today. My question has always been if we all say we are waiting for the economy to recover, who is working on the recovery of this economy that we speak about? The economy is made up of different industries and these are made up of different companies and entities and in turn these companies and entities are run by individuals, that being you and me.
So in essence the recovery of the economy will only be in motion the day you and I decide to get up and make things happen. And I believe the insurance industry has a pivotal role to play in this recovery. Insurance should be perceived not only as a protection mechanism, but more importantly as a partnership that allows individuals and businesses to spread their wings and go where they might otherwise not have dared to go.
The insurance industry is skills driven and it must be appreciated that the human capital requirements for the insurance sector have to be kept evolving in line with international trends. While the insurance industry is focusing on developing its own human resources, there is also a need to start helping other players who work closely with the sector to build on the depleted human skills base. These and other ideas that have been put forward by other scholars and authorities in this industry will help see our insurance industry find its footing again and hopefully restore the mutual trust with its consumers.
Collin Banda is a Part Three student at the National University of Science and Technology. He is currently furthering his studies in Risk Management and Insurance. You can contact him on 0774561899 or [email protected] <mailto:[email protected]>
