Mixed feelings over insurance companies, farmers
Thursday, 03 May 2012 00:00
Agriculture Reporter
THE issue of disputes between insurance companies and farmers has received mixed reactions with insurers accusing farmers of misrepresenting facts. Tobacco growers have been crying foul over insurance companies deducting money through stop orders facility without their consent. According to the farmers, insurance companies usually act as guarantors to input schemes and most farmers said they were not aware of that position until the time when the money was deducted.
Affected farmer, Mrs Sophia Marimo, said she only realised that she was insured by SFG Insurance company after money was deducted from her account.
“I never benefited from the input scheme I had joined and was surprised that SFG deducted money from my tobacco sales,” she said.
The Tobacco Industry and Marketing Board (TIMB) had to suspend some insurance companies from the stop order system pending investigations.
SFG Insurance chief executive officer, Mr Charles Madziva, said the company was not among those suspended.
“We met with Dr Andrew Matibiri and he confirmed that,” he said.
Mr Madziva defended his company and said it was not one of the dubious insurance companies that were duping growers.
“For the record, the farmer in question (Mrs Marimo) signed willingly a tobacco insurance application form and stop order. If she had changed her mind she should have informed us at inception not when the cover has run for the full period. Cover was granted with the understanding that premiums would be paid upon sale of the crop.
“If the farmer had suffered a loss, we would have honoured the insurance contract. By agreeing to collect the premiums in retrospect does not absolve the farmer from their contractual obligation of paying the premiums as per agreement.
“We did not deduct premiums without the knowledge and consent of the farmer. As indicated, these signed records are available for your perusal,” he said.
SFG Insurance has so far assisted more than 5000 farmers to access inputs from various stakeholders at a time when banks were unable to fund these farmers.
A number of farmers assisted by such firms had high yields as the inputs were accessed on affordable terms.
Labels: INSURANCE, TOBACCO
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Bill to protect bank deposits
Monday, 27 June 2011 01:00
By Golden Sibanda recently in Victoria Falls
GOVERNMENT is working on legislation to restructure the Deposit Protection Board by establishing a new entity with powers to deal with failed banks.
Addressing the African chapter of the
International Association of Deposit Insurers' Conference in
Victoria Falls last week, DPB acting manager (risk analysis) Mr Wisdom Mandizvidza said the Bill had been tabled before Parliament.
"The Deposit Protection Corporation Bill seeks to provide the DPB with bank resolution powers and effectively complement the supervisory efforts of the central bank," he said.
The IADI conference ran under the theme "Financial Stability in Africa: Role of Deposit Insurance and Financial Inclusion".
Mr Mandizvidza said the Deposit Protection Corporation Act would help overcome some of the problems arising from the 2003-2006 financial crisis which claimed 14 banking institutions.
He said the challenges had presented a strong case for a review of bank supervisory powers and bank resolution regime and were now well placed to deal with similar problems.
The banking sector had been largely stable since independence. But in 1995 it had started to exhibit signs of distress. It was not a big surprise when United Merchant Bank was liquidated in 1998.
In the same year, two more banks - Universal Merchant Bank and First National Building Society - were placed under curatorship, setting the stage for what turned out to be a widespread crisis in the sector.
After realising that depositors of the liquidated banks did not receive compensation, the Government decided to establish the deposit protection scheme. This eventually gave birth to the DPB in 2003.
The role of the DPB was confined to compensating depositors for the insured amount in the event of a bank failure.
The DPB has handled payouts for two liquidated discount and finance houses. It is now set for transformation of its mandate and responsibilities as the Deposit Protection Corporation.
Under this arrangement it would assume the supervisory function to prevent bank failures.
In the 2003-2004 financial crisis the DPB was only involved in reimbursing depositors of failed banks, as it had just been formed.
It had no financial capacity, while the central bank played a prominent role. But it has emerged that other nations, such as Nigeria and Malaysia, Canada and the US, now have fully-fledged deposit protection institutions with legislative powers for bank supervision and monitoring.
According to Mr Vijay Despande from the Federal Deposit Insurance of Canada, there will always be bank failures of some kind, no matter how strong regulatory, supervisory and monitoring systems may be.
This makes the case for well-established deposit protection schemes more critical, he said.
Developments at Renaissance also showed that bank failures could still occur in Zimbabwe.
The DPB said the 2003-2004 financial crisis had provided lessons on the need for strong preventive and bank resolution structures to be able to deal with similar bank failures in the future.
This is particularly important, considering the failed bank resolution challenges of the 2003-2004 era.
Three banks amalgamated into the Zimbabwe Allied Banking Group - Barbican, Royal Bank and Trust Bank - challenged the legality of their amalgamation into ZABG. This led to a protracted battle with the central bank. While curatorship was meant to preserve depositors' funds, some banks stayed under curatorship for more than a year and depositors' funds locked in the closed banks lost value due to hyperinflation.
Depositors also lost confidence in banks, which has called for a more efficient and effective bank resolution framework. But apart from empowering the DPB to have resolution powers over troubled or failed banks, Government will need to ensure the institution has financial resources to be able to intervene in case of a bank failure.
The bank sector crisis of 2003-2004 was attributed to unstable economic conditions, diversion from core business, inadequate risk analysis systems, poor corporate governance structures, high levels of non-performing loans, overstatement of capital and chronic liquidity challenges, among other factors.
Labels: BANKING, INSURANCE
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Econet launches Diaspora life assurance service
by Business Reporter
13/10/2010 00:00:00
ECOLIFE, the mobile life insurance service launched last week by Econet Wireless Zimbabwe, will be extended to Zimbabweans living outside the country before the end of the year, the company has announced. This comes as Econet reported strong subscriber uptake of the new product after its launch in Harare last week.
Zimbabweans living in South Africa who regularly call home would be able to register for life cover, making it possible for their families to get up to $10 000 in Zimbabwe if they die in South Africa.
"We know that many Zimbabweans living in South Africa are the main bread winners and, when they pass away, families often struggle to even get their bodies home. We want to help them if they are our customers in South Africa.
"All they would need to do is to use Econet Wireless South Africa. If they call home, we would analyse how much they spend on calls to Zimbabwe, as that is part of our income here," Econet spokesman Ranga Mberi said.
The push by Econet Wireless into the diaspora began last year and the company's South African sister company has already sold more than 500 000 SIM cards in that country.
Meanwhile, Econet Wireless Zimbabwe Chief Executive Officer Mr Douglas Mboweni has described the response to Ecolife as one of the most spectacular the company has ever experienced.
"We registered more than 30 000 users in the first two days, which means we should have most people registered by Christmas.
"This is quite spectacular, as it means Zimbabweans will have the same level of insurance cover as some of the most advanced economies, even ahead of South Africa," said Mr Mboweni.
Mr Mboweni said the partnership with First Mutual Life to offer insurance service was one of many such partnerships planned for the future.
He issued a general invitation to other companies to approach Econet to partner for other services.
"Econet has a network that reaches millions of consumers and we want to use that network as a platform to offer other services.
"You can partner with us to provide banking services or make bill payments. We are open to listen to new ideas that are innovative and make life easier and more cost effective for our customers," he said.
Labels: ECONET, INSURANCE
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ZSIC leans towards agriculture as it repositions its business
By Charles Mangwato
Mon 21 June 2010, 04:01 CAT
ZAMBIA State Insurance Corporation (ZSIC) Group of companies says it will position itself strategically so that it is not only an insurance company but a partner of all sectors in economic development.
ZSIC Group managing director Irene Muyenga said the company would particularly support the agriculture sector because of its crucial role in economic growth. Muyenga was speaking in Choma on Saturday at a cocktail party hosted for the farming community in the district.
She said as part of the strategic focus, the company would in the next five years provide adequate insurance for the rapidly developing sectors of the economy, especially agriculture.
Muyenga said agriculture had been a very strategic area of business and ZSIC would provide insurance products that would meet specific insurance demands of the farming community at competitive rates.
She said the company’s priority was prompt payment of claims within the stipulated time once a claim was lodged with ZSIC.
“I am aware that sometimes we may take long to make payments, but I would like to positively assure you that your business with us is soundly safe and we shall definitely be able to pay you,” she said.
Muyenga said ZSIC Group’s asset base could not be compared to any other insurance company in the country.
She further claimed that ZSIC Group was probably the only insurance company that returned most of its re-insurance premium back into the country for local investments.
“This should tell you that we are there to safeguard your assets and we shall continue doing that in many years to come,” she said.
Muyenga added that ZSIC Group continued to command respect, not only within the country, but also abroad.
She thanked the farming community in Choma for their continued support to the company as evidenced through the increased volume of business.
And ZSIC says it will establish a microfinancing institution that would provide financial assistance to Zambians at affordable borrowing rates.
Muyenga said the new institution would provide microfinance at reasonable interest rates as compared to other institutions that were currently exploiting Zambians.
She said this situation would inevitably force other commercial banks and microfinance institutions to review their interest rates in favour of the Zambian people.
Muyenga said this would be good for the Zambian economic landscape because people would borrow money for investment at reasonable interest rates.
She said ZSIC was better placed to manage microfinance since the company had been funding institutions that are involved in similar business.
“Then we decided that she should short-cut the process and just deal with the public directly by providing finances at reduced rates,” she said. “This will force other banks and lending institutions to reduce their interests.”
Muyenga said ZSIC was also working out products to meet the needs of the growing informal sector.
She said the company intended to establish a personal pension scheme for people who were self-employed for them to save money for their future needs.
Muyenga said the company plans to collaborate with the Zambia National Marketeers Association (ZANAMA), Bus Drivers Association and the Cross Border Traders Association in the implementation of the envisaged scheme.
“We understand that for us to succeed in our business, strategic interaction and engagement with our clientele is of crucial importance as we package our products,” she said.
Muyenga said ZSIC had been restructured to achieve growth and diversification in its streamlined operations which had become more efficient and effective in service delivery.
Labels: AGRICULTURE, INSURANCE, IRENE MUYENGA, ZSIC
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Farmers urged to get insurance
Herald Reporter
Farming experts have encouraged farmers to insure their livestock and crops to cushion them from the effects of natural disasters such as floods, hailstorms and droughts.
The call comes amid an increase in the number of farmers who have been caught off guard by unfriendly weather conditions and disease outbreaks.
An official with Jupiter Insurance, one of the few companies that provide insurance for farmers, Mr Philimon Mawubire, said farmers needed to take farming as a serious business and insure their crops and livestock so that they do not lose out in cases of disasters. He said the unpredictable weather conditions that had been experienced in Zimbabwe and the region require that farmers be prepared.
"We are encouraging our farmers to insure their tobacco crop from the growing stage right to the auction floor by taking the hail to floor insurance cover.
"This will ensure that the crop is covered until it is on the auction floors and guards against adverse weather effects, fire and mishaps during transporting.
"Hailstorms are still there and we encourage farmers to rush to cover their crop. Even if a farmer may not be affected by hailstorms, he or she may be affected by fire or (the crop) gets stolen or is lost during transportation," he said.
In the event that a farmer loses his livestock or crops due to natural disasters, insurance guarantees them compensation.
Hailstorms last week destroyed crops in Mt Darwin, Beatrice, and parts of Harare and Chegutu leaving the farmers counting their losses.
Mashonaland Central provincial Agritex officer Mr Stancilae Tapererwa said most farmers did not insure their crops leaving them at the mercy of natural disasters.
"We have been getting reports of farmers who are continually losing their tobacco and maize. Recently farmers lost 2,7 hectares of tobacco to hailstorm. That is why we keep on advising farmers to insure their crops. We would want to urge responsible authorities to embark on a massive campaign to encourage farmers to plant trees to reduce the impact of strong winds on buildings and crops," Mr Tapererwa said.
Mr Mawubire said his company had witnessed a slight increase in inquiries and uptake of crop insurance covers over the past weeks. Farmers, he said, did not see the value of insuring their crop but recent events had shown the need to get cover for their crops.
Labels: FARMERS, INSURANCE, JUPITER INSIRANCE
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ZISC aims to stay atop in insurance business
By Justin Katilungu in Kabwe
Wed 18 Nov. 2009, 04:00 CAT
ZAMBIA State Insurance Corporation (ZISC) managing director for general insurance Gilbert Sikazhwe has said the corporation will endeavour to be a market leader in the insurance industry.
During a Golf tournament reception held at Kabwe Golf Club, Sikazhwe said the re-branding of the corporation into ZISC Limited as the holding company, ZISC Life Limited and ZISC General Insurance Limited as subsidiaries was vital for future business of the group.
In conformity with the amended insurance Act No. 26 of 2005 which made it illegal for any insurance company to transact both life and non-life business, the corporation has been split into a group of companies.
"The birth of these companies encompasses the vision the company has had for many years that of growth and diversification which has led to this phenomenal re-branding exercise," he said.
Sikazhwe said for 40 years, ZISC had stood its undoubted status as Zambia's premier composite insurance company providing all types of insurance for life, general and administration of pension funds.
"We shall therefore endeavour to be market leaders in the insurance business. The strategic focus for the two subsidiary firms in the next three years will be to provide adequate insurance for the rapid growing sectors of the economy," he said.
Sikazhwe singled out the sectors with mega-risks as mining, agriculture, tourism, manufacturing and construction.
In anticipation of the growth, Sikazhwe said the corporation had created higher and broader underwriting capacities internally and externally in conjunction with its reinsurance partners.
He said ZISC would always continue to enhance its products and product delivery to its clients.
Sikazhwe stressed that in its quest to enhance effectiveness and efficiency, the company would continue to tailor products aimed at catering for every unique insurance need in the country.
For Kabwe, he said the corporation had products on offer - according clients a one-stop shop for their various needs such as the farm pack, which provided major types of risks that a farmer needed to protect their assets and human capital.
"ZISC will continue to stretch its presence so that we get a clear understanding of problems that our clients are facing and adequately communicate on the changes taking place in our environment," he said.
With one renewal and one premium, administration costs are reduced enabling ZISC to give out discounted rates depending on the number of sections selected.
Sikazhwe commended royal clients for supporting the insurance company and assured them of improved customer service and product delivery.
Labels: INSURANCE, PARASTATALS, ZISC
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Milambo bemoans low level insurance market
Written by Chiwoyu Sinyangwe
Friday, August 28, 2009 2:53:49 PM
THE insurance sector has only penetrated fourper cent of the country’s population, newly-branded Diamond General Insurance Limited chief executive officer Tobias Milambo has said.
And Diamond General Insurance has spent K2 billion to boost its balance sheet to achieve operational competence after rebranding from Cavmont Capital Insurance Corporation which was majority-owned by Zimre Holding, as a consortium of Zambian entrepreneurs acquired a majority 57 per cent shareholding.
During a press briefing yesterday, Milambo observed that the insurance sector had continued to contribute insignificantly to the country’s economic output when regional average contribution was about 10 per cent.
And board chairman Arthur Ndhlovu said the rebranding process would help the exclusive general insurance provider to reposition itself in the market and contribute to economic growth.
He also stressed that there was no link between Cavmont Capital Group and Diamond General Insurance.
Labels: CAVMONT CAPITAL GROUP, DIAMOND GENERAL INSURANCE LTD, INSURANCE, TOBIAS MILAMBO
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TA in huge expansion deal
Bloomberg
Mon, 13 Jul 2009 07:29:00 +0000
TA Holdings Ltd, a diversified investment company with strategic and portfolio investments in Zimbabwe and other parts of sub-Saharan Africa, will this month finalise a huge expansion deal in Uganda, which will make its subsidiary, Lion Assurance Uganda Limited, the largest insurance company in central Africa.
The group already holds 58,3 percent in the short-term insurer. Well-placed sources say TA has successfully applied for a composite license to diversify the operation into life assurance business, a strategic move that may see the investment realising its first underwriting profit this year.
Last year, underwriting loss increased 46 percent from Sh4,6 billion in 2007 to Sh6,7 billion the year before. "We are in the process of concluding a large expansion deal in Uganda.
We should be through by mid-July," Donald McDevitt, the chief operations officer for the group, said. "The deal will make us the largest insurance company in central Africa."
McDevitt said the company had already raised enough money to finance the expansion, which may also include an acquisition of an additional stake in the Kampala-based company. "We are cash-rich at the moment. Our cash balance is currently around US$11-12 million."
Recently, the company also acquired 85 percent of its local insurance operation, Zimnat Lion Insurance Company, after it successfully bought out minority holders through a share-to-share transfer.
After the take-over, Zimnat subsequently delisted from the Zimbabwe Stock Exchange (ZSE) on Monday last week. TA's strategic vision is to expand its insurance business to eight countries in sub-Saharan Africa, including Nigeria, by the end of the year and to 12 by 2012.
The transnational conglomerate has also acquired a 30 percent stake in the distribution arm of ZSE-listed PG Industries Ltd. "The deal has already been signed and we will be making an announcement in the next 10 days," McDevitt said, adding that the transaction was financed wholly from internal sources.
The Financial Gazette understands that the deal will buttress plans by the ZSE's fifth largest company by market capitalization to seize distribution opportunities in Botswana and Mozambique. Recent mining and construction expansion programmes in both countries have created a vibrant procurement and trans-industrial shipment market.
TA is also understood to be locked up in contract negotiations with its hotel partners in Ghana, Malawi and Zambia with a view to increase its stake in the hotels, which are owner-controlled but operated under the Cresta Hotels franchise. The company operates four Cresta hotels in Zimbabwe and two more in Botswana and South Africa.
Cresta Marakanlo Pty Limited in Botswana, rated sixth largest, is currently being refurbished by the Botswana Development Corporation, an upgrading which could see it scaling up in rank to number three.
Labels: INSURANCE, NEOLIBERALISM, TA HOLDINGS LTD, UGANDA, ZIMBABWE
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Financial meltdown hits insurance sector
Written by Mutuna Chanda in Ndola
Sunday, July 05, 2009 4:28:04 PM
ZSIC Group of Companies managing director Irene Muyenga has said the insurance industry is feeling the pains of the global financial meltdown. And commerce minister Felix Mutati said the government would this year implement reforms that would reduce business licences from 517 to 290 under the first phase.
Speaking during a ZSIC cocktail on Friday evening at the ongoing 44th Zambia International Trade Fair (ZITF), Muyenga said firms in the insurance market were finding ways of staying afloat.
“Products in the Life category are becoming increasingly difficult to sell as prospective clients opt to use their income on household goods rather than buy life insurance products,” Muyenga said. “As for general insurance products, we have seen a general decline in the risks being covered as most of the clients opt for the cheapest products or not insure at all in order to reduce costs.”
She said ZSIC Group’s new strategic focus would be targeted at additional investment opportunities in infrastructure with more emphasis on multi-purpose property.
“These will be modeled to include business, leisure, retail and residential space among other ventures,” she said. “In anticipation of this growth, the group has created higher and broader underwriting capacities both internally and externally in conjunction with our reinsurance partners. We also intend to bring the un-insured in the informal sector on board through the provision of micro-insurance. By the term un-insured we refer to the marketeers, bus drivers and conductors, traders, SME’s and many others.”
She said ZSIC planned to set up micro financing and asset and property management companies in the medium term.
“Our ultimate goal is to have the Group listed on the Lusaka Stock Exchange by 2011,” said Muyenga.
And Mutati said the reduction on the number of licences would cut by 30 per cent on the compliance costs which stood at K2 trillion.
He also said that K1.3 trillion could be channelled to job creating investments if ZSIC and the pensions funds worked together to unlock their investments.
Labels: FELIX MUTATI, GREAT DEPRESSION II, INSURANCE, IRENE MUYENGA, ZITF, ZSIC
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Mapipo urges African insurers to design appropriate products
Written by Nchima Nchito Jr
Friday, May 08, 2009 5:31:53 PM
AFRICAN insurers and intermediaries have a heavy responsibility of improving the general standard of living of the continent, registrar of Pensions and Insurance Authority (PIA) Chris Mapipo has said.
During the Organisation of Eastern and Southern African Insurers (OESI) training seminar in Lusaka yesterday, Mapipo said this could be done through financial intermediation role and designing appropriate insurance products.
“The fact that the world is experiencing the worst global financial recession means that the demand on the insurance industry for higher coverage across a wide range of risks will most likely increase, yet clients’ capacity remains limited,” he said. “Africa will sooner than later demand much more capacity than its present share globally.”
Mapipo added that there would be increased demand for specialist insurance products within the OESI largely due to increased trade and infrastructure development.
“Building up the talent pool of experienced and highly competent underwriters, claims managers and brokers in these specialised areas is key success factor,” he said.
He said the role of insurance intermediaries had also evolved.
“From the traditional role of matching and placing of insurance risks for their client with insurers and reinsures, insurance intermediaries have moved up the value chain to essentially provide enhanced services in order to remain competitive and relevant,” Mapipo said. “The risks faced by their clients have become much more complex given the expanded business markets beyond traditional boundaries.
Underwriters and the insurer’s intermediaries alike have had to keep up, not only in understanding the developments within their client’s areas of operation but also complex nature of the potential risks exposures that their clients face. Only then can they provide value added risk management and insurance services.”
Mapipo expressed hope that the insurance sector would rise to the current economic challenges.
And OESI chairperson Irene Muyenga said the main challenge faced by the organisation was re-capitalisation and the enhancement of its capacity in order to handle huge risks.
Labels: CHRIS MAPIPO, GREAT DEPRESSION II, INSURANCE
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State to cement insurance industry
By Business Reporter
THE Government is in the process of finalising institutional investment guidelines to provide benchmarks in the local insurance industry, Pensions and Insurance Authority (PIA) registrar, Chris Mapipo has said.
Mr Mapipo said the fact that the Government had included the social protection and social security chapters in the Fifth National Development Plan was testimony to the importance that it attached to the industry.
He said during the launch of the Pension Bridge Magazine in Lusaka at the weekend that the schemes were positively contributing to the development of the financial and capital markets.
“The Government has also allocated some slots for the association to be represented on a number of boards, such as the Pensions and Insurance Authority board,” Mr Mapipo said.
Speaking at the same function, Zambia Association of Pension Fund Managers (ZAPFM) president, Charles Mpundu said increasing competition in the pensions and insurance industry should be encouraged to grow because it was leading to improved service delivery and increased returns on investments.
Mr Mpundu said the competition had led to better service delivery mechanisms and a call for improvements in benefits levels.
He said there had been improved regulatory input by the Government, through the PIA, which had helped to wipe out the negative image about the sector.
Mr Mpundu said that investment management skills in the industry had improved, resulting in better returns being earned on pension savings.
The pension fund management institutions had also been very active in the capital market, as they have been leading in equity investments in the stocks of the listed companies on the Lusaka Stock Exchange.
“The various pension schemes, as contractual savings, continue to play a significant role in the development of the capital markets,” he said.
Mr Mpundu said the assets under the various fund managements and administrators had increased significantly over the year, and stood at K1.8 trillion in 2008, excluding the funds under the National Pension Scheme Authority.
Those successes notwithstanding, the pensions industry continued to face various challenges especially relating to late settlement of pension benefits to the beneficiaries and the fact that many pensioners receive very little returns to sustain their livelihood.
He said the Government would do well to provide incentives, especially those relating to taxation, in order to see more enthusiasm in the pension industry.
“Thus, the bad image of the past is really changing, especially if Government provides the tax and other incentives that the industry has been crying for,” Mr Mpundu said.
On the launch of the magazine, he said it had been the wish of the pension fund managers to provide more information to different clients and the general public, and the pension bridge would provide insightful updates to all the stakeholders.
Labels: CHRIS MAPIPO, INSURANCE, PIA
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ZSIC subsidiaries don’t qualify to be licensed as insurance companies, says Mapipo
Written by Chibaula Silwamba
Friday, January 02, 2009 3:07:57 PM
THE Pensions and Insurance Authority (PIA) has revealed that Zambia State Insurance Corporation (ZSIC) subsidiary companies do not qualify to be licensed as insurance companies because of some irregularities contrary to the law.
And PIA registrar Chris Mapipo has queried ZSIC for abrogating the law by appointing a person who does not meet the requirement of 10 years experience in the insurance industry as its managing director for the ZSIC Life Company.
According to Mapipo's letter dated December 26, 2008 to ZSIC Limited managing director Irene Muyenga and obtained by The Post in Lusaka, PIA issued the licences to ZSIC Life Company and ZSIC General Insurance Company with “great reluctance” but with strict instructions that ZSIC normalises all the issues it was queried on by March 31, 2009 latest.
“Firstly, we wish to advise that the mandate for you to operate as a composite insurance company expired on 23rd December 2008. This entails that you no longer have the capacity to enter into or sustain an insurance contract from that date,” stated Mapipo in a letter copied to Ministry of Finance permanent secretary Dr Wamundila Mbikusita-Lewanika and PIA board chairman Smart Phiri.
“The three year period granted to Zambia State Insurance Corporation Limited to reform itself has certainly been sufficient time for you to have transferred all contractual obligations to the two separate insurance companies that have been formed.”
On share capital, Mapipo stated that all entities licensed by PIA submit copies of their bank statements as proof of capitalisation.
“Kindly ensure that the relevant bank statements are submitted by 31st December 2008,” he stated. “Your company was given a list of our licence requirements. The schedule clearly indicated that the business plan must show three years projections of the balance sheet, profit and loss account and revenue accounts. We are at pains to understand why despite the three year grace period you are unable to submit these details.”
Mapipo stated that ZSIC's submission on the matter was incomplete.
“We wish to advise that this is probably the first time we are having problems accepting a business plan from an existing insurer. Kindly ensure that a proper plan is submitted by 31st January 2009,” Mapipo demanded.
Mapipo also expressed dissatisfaction with the submission on reinsurance.
“Your submission on this point raises great concern. Zambia State Insurance Corporation Ltd ceased to carry out business on 23rd December, 2008.
In the circumstances, the new insurance companies need to arrange their own reinsurance programmes for the risks that they will carry. They cannot rely on the contracts entered into by the holding company for the entire first quarter,” Mapipo stated. “If indeed there is an understanding that the reinsurers of the holding company will provide cover for the newly formed companies, this must be evidenced in writing.
As you are well aware, Section 102 of the insurance Act especially requires insurers to submit reinsurance treaties or reinsurance programmes to the authority. It is of great concern to us that there is no evidence of reinsurance protection for the first quarter of 2009. Given the time that you have had this should have been done in time. Kindly ensure that this is carried out by 31st January 2009.”
And on the appointment of a chief executive officer/managing director of ZSIC Life Company, Mapipo noted that the law was very clear and PIA would not allow any person who does not meet the requirements to take up such a position.
“The provisions of Section 26 (4) (b) are binding and cannot be altered by my office. Kindly ensure that you appoint an individual with the required experience by 31st March, 2009,” stated Mapipo in reiteration to his earlier letter dated November 26, 2008, in which he wrote:
“The proposed chief executive officer does not meet the 10 years experience required under Section 26 of the insurance Act. The Act does not provide for a separate officer. The chief executive officer is the principal officer of the company.”
Mapipo demanded that ZSIC complies with the law.
“It is with great reluctance that we, therefore, grant you the licences for your subsidiary companies. From what is outlined above, your companies do not qualify to be licensed.
However, in the interest of the nation and hoping you will be compliant, the licenses have been issued. Kindly take our observations and deadlines seriously,” Mapipo stated.
“Licence numbers 0049 and 0042 are issued respectively in favour of Zambia State Insurance Corporation General Limited and Zambia State Insurance Corporation Life Limited.”
In his earlier letter dated November 26, 2008, Mapipo stated that his office acknowledged receipt of an application for a long term insurer's licence submitted by ZSIC for its subsidiary company [ZSIC Life Limited] but PIA could not make full analysis of the application because ZSIC did not supply adequate information.
“The application form for a licence needs to be signed by a director of the applicant company. In the application form that has been submitted, this has not been done. No three year business plan has been submitted. There is no evidence provided to show that share capital has been paid for. A list of all assets and liabilities of the company needs to be provided as required by Section 10 of the insurance Act,” Mapipo stated.
“Employees listed as branch managers are the same as those listed under Zambia State Insurance Corporation General Ltd. The employees cannot work for two insurance companies.”
Mapipo further demanded that there was need to clearly outline the services that would be covered by the holding company [ZSIC Ltd] and the terms of engagement.
“I would further suggest that you consider holding on to your plans to launch the company until full compliance is met,” advised Mapipo.
But ZSIC company secretary Anock Mbambala said ZSIC had resolved all the queries that PIA had raised.
“Those were preliminary enquiries that PIA was making during the split period. After that letter [of November 26] we clarified all those [queries]. That is why the licenses were granted. Naturally, during the preliminary process, there is that interchange of ideas. They were enquiring on certain things and after some discussions and write ups all those were clarified. Eventually they issued a licence…I think that was two or three days ago,” Mbambala said.
Asked about the query on the managing director of ZSIC Life Company who does not meet the qualifications, Mbambala responded: “Even that we discussed with PIA and it was resolved. It was one of the issues that they raised.”
Further asked if ZSIC had found another person with 10 years experience required by law or it had maintained the same appointee, Mbambala said that the appointee was suitable.
“He is actually suitable.
There was just some misunderstanding…he has the 10 years experience. This is an individual who was working for…I think Stanbic [Bank] for five years then he worked for African Life Assurance for another five years and then he has worked with us,” said Mbambala.
However, Mbambala's argument contradicts the law because the insurance Act requires that the appointee to the position of managing director/CEO of an insurance company should have 10 years experience in the insurance industry and not any other field.
ZSIC has transformed into a holding company called ZSIC Group of Companies or simply ZSIC Limited, which would manage two subsidiary companies - ZSIC Life Company and ZSIC General Insurance Company.
Labels: CHRIS MAPIPO, INSURANCE, PIA, ZSIC
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By CYNTHIA MWALE
FINANCE and National Planning Minister, Ng’andu Magande, has launched the first-ever indigenous reinsurance company, with a call to the industry to retain local risks and reduce outflow of foreign exchange. Prima Reinsurance Plc, formed with a share capital of K2 billion, is expected to be quoted on the Lusaka Stock Exchange by the end of this year.
Officiating at the launch of Prima Re on Wednesday night, Mr Magande commended the company for coming up with the initiative saying it would add capacity to the market and retain some of the risks that insurance companies could not retain.
Mr Magande added that the retained premiums would be invested in other sectors of the economy.
“Prima Re is not only the first Zambian reinsurance company but it is a private sector initiative with no government funding. This is the kind of initiative expected of an innovative and vibrant private sector,” he said.
He challenged Zambians to pool resources together and develop an internationally respected reinsurance company.
“Zambians should not continue to wait for foreign investors to develop their country, even when they have the financial capability to grow their own industries,” he said.
Mr Magande said Government was looking forward to a time when all local risks would be retained citing risks in mining, energy and telecommunication sectors.
He, however, noted that the reasons for underwriting such type of risks particularly, in mining were due to lack of capacity and expertise in the market.
The minister urged the insurance industry to step up training of its underwriters in various fields adding that use of the insurance business college be maximised through training of staff in the industry.
On the Pension Insurance Authority (PIA), Mr Magande called on the PIA to seal all the loopholes for companies in a habit of directly insuring or reinsuring risks outside the country.
Under the Insurance Act of 1997, it is illegal to insure or reinsure risks outside the country directly by companies.
He also said Government had directed the PIA to revise the minimum capital to address problems of low capitalisation of the insurance companies to allow increased risk coverage.
Earlier, Prima Re managing director, Exhilda Lumbwe said the establishment of the company arose from the need to protect local insurance companies against large losses and provide additional capacity to the market.
Ms Lumbwe also said the other reason was of the absence of a local reinsurance company.
She said statistics have shown that the country was losing over 30 per cent of premiums annually in form of reinsurance.
“For instance, in 2004, the insurance premium for general business in the market was K257 billion of which K106 billion went out as reinsurance premium”, he said.
Ms Lumbwe said Prima Re intends to raise its capital to an internationally acceptable level through the sale of shares on the LuSE.
“The process of ultimately listing on the Stock Exchange is underway and we should be quoted on the exchange market by the end of this year.
We are already discussing with interested corporate organisations to buy shares in the company under our private placement initiative,” she said.
Labels: INSURANCE, MAGANDE
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