Insurance sector can improve our economy — Nduna

Zimbabwe’s largest reassurance company Zimre Holdings Ltd (ZHL) group CEO Albert Nduna (AN) chats with Zimbabwe Independent business reporter Taurai Mangudhla (TM) on the company’s outlook as well as the country’s insurance sector Below are excerpts:

TM: Some say micro insurance is the future. What’s your take on that in general and in particular Zimre’s situation as a company?
AN: I personally agree and as Zimre I think we are very active. We started about three years ago by building the right products which meet the rural area, the micro economy. So we have started that programme with some pilot projects.

TM: I know you are at pilot stage, but what have been your observation so far?
AN: They were successful and they showed that there is need for insurance in that sector and what companies and people have done is to transplant a big, I was about to say a greater, product, and take it to Murehwa or Plumtree. We are saying that is not the right way so let’s come up with a proper product and again it’s that drafting and designing which we are doing.

TM: How far are you in terms of delivering?
AN: What I can say is definitely this year. We will deliver on the market.

TM: Would you care to share some of the packages the market should expect?
AN: I think generally, what we are looking at is to have life covers, property covers, and agriculture covers.
Agriculture is a difficult product but we believe with improved scrutiny and the products that are offered as agriculture insurance, we can come up with a win-win situation where our farming communities are looked after, where the lenders of money to the farming communities are looked after and insurers are also viable. The market has taken a simplistic approach so I think we need a more serious approach.

TM: Focusing on our economy, what role can the insurance industry play?
AN: I think if we look at the background, the issue is about funding and the question should be how we can mobilise resources as a country for the business community, farmers and so on. Insurance is an investable area and what we want is for insurance to be a savings for the economy, either as life because we will say here are people who put their money aside not for today but for 20 years. Even today there is a pool which we are creating for construction, for government and so on.

I also think as a people we have a lot of basic resources which we should use for our needs. These are the things we need to look at and also assist in projects because there are certain projects which, without cover, you will not be able to deliver and you won’t have the courage to do, but the lender would have been able to lend if there was cover for that operation.

TM: What is the country’s history in terms of insurance performance?
AN: At some point in Zimbabwe, premium for non life was over US$600 million but now it is below US$200 million, but we are now rebuilding towards that. One time it was below US$80 million but we are moving because we want to go back to that US$600 million and beyond.

TM: What do you think is required as an enabler to this recovery dream?
AN: What is needed is for people to be educated so that they understand that insurance is good for personal security. I know the outcry out there, with people saying they have lost money and so forth. There is no point crying over spilt milk, it was not anybody’s problem so we need to look forward and say life was there yesterday, it is there today and tomorrow so you need to look after it.

TM: What is the progress building confidence?
AN: I think we need to engage the authorities and government and come up with more incentives for people to invest in insurance. For instance, in the 90s, there was the issue of prescribed assets.

TM: What’s your opinion on the need to compensate pre-dollarisation policy holders?
AN: I think I could address it in two ways, the first part is nobody liked what happened. That is a situation which we found ourselves in and going forward let’s get insurance because if you don’t the burden for somebody who has US$1 000 benefit and someone without insurance is different.

We are also talking of real money now. The issue of compensation touches on the Zimbabwe dollars which are not in the banks but somewhere in the systems. Insurance of these Zimbabwe dollars also comes up and it deals with everyone including authorities and industries.

I think people were hurt but the problem is how do we address it, it’s like I want to send my child to school but I don’t have money so what do I do with the needy area? We need to put our heads together.

TM: What sort of changes do we need in terms of the policy environment to stimulate insurance growth?
AN: I think one of them is tax benefits. If I have a policy and I am paying premium there must be softening of that burden on me as an individual. If I insure my house and so on, those should be considered as expenses to my operations or buildings as insurance, the premium I pay should be deductable for tax purposes and this prescribed assets status that if insurance companies are investing in certain government securities it should be considered for tax purposes.

The income which comes out should be taxed lightly and all those incentives will mean a company is able to sell more policies and we benefit.

TM: There is a general trend that companies are relying on short term insurance, particularly third party vehicle insurance. Why do you think the market is in such a situation?
AN: That’s a worry because what is happening is that the liquidity situation is such that people are hard pressed to meet premium obligations. I would like my car, which I bought for US$5 000 to be fully covered in case of a serious accident but I don’t have money because of tight liquidity that’s why I go for the third party.

As insurance practitioners, we would want everyone insuring their vehicles comprehensively, but because of liquidity problems people will say I can only meet the legal obligation.