Zimbabwe’s insurance industry is under criticism for alleged shortchanging of clients leading to low business confidence.
The trend has also affected investment portfolios on the stock market where shares under insurance firms are also being snubbed where the sector’s huge appetite for investing in low valued stocks has eroded gains for the investing public.
Lack of investor confidence in the insurance sector is a worrisome element which has raised questions over the sector’s ability to under right claims.
With a combination of rampant misuse of insuring public funds, failure to account for the proceeds and delays in fulfilling claims have seen the insurance sector being viewed with suspicion.
But taking into account the significance of the sector concerns are also being raised regarding the high cost of premiums, failure to declare dividends, inability to cover for medical aid facility and difficulties in settling risks there has been an investor flight for the sector thereby posing challenges to industries about whether to take insurance or go it alone.
The trend has attracted the attention of the Minister of Public Service, Labour and Social Welfare Minister, Cde Prisca Mupfumira who told stakeholders during a insurance and pensioners conference that insurance companies are now a cost to the economy.
Lack of a common regulatory policy has resulted in discord with the country’s capital markets as evidenced by different set of rules governing both the stocks and insurance portfolios.
Insurance and pensions commissioner Tendai Karonga confirmed that some companies take advantage of loopholes, a development that is affecting public confidence in the sector.
The insurance industry is being considered critical in terms of achieving Zimbabwe’s financial inclusion aims but with the current decline in investor sentiments, then regulatory authorities ability to stop the rot in the sector is under scrutiny.
While the insurance industry has not been spared from the economic challenges it is the view of the public that the sector is taking advantage of the financial illiteracy of most subscribers.