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Nobert Musa Phiri and Michelle Chikomo
Just as the Industrial Revolution transformed the development of manufacturing processes centuries ago, the Internet Revolution has changed the operations of the insurance industry. Consumers who once transacted through paper transactions are now buying insurance products using computers and smart phones.

E-insurance is broadly defined as the application of Internet and related information technologies to the production and distribution of insurance services. In a narrower sense, it can be defined as the provision of an insurance cover, whereby an insurance policy is solicited, offered, negotiated and contracted online. The evolution of insurance business by information technology affects all the major stakeholders who include the insurance companies, consumers, insurance brokers and the regulator of insurance business.

Improving the consumer experience?
In Zimbabwe, more insurers are going digital and interacting directly with consumers. Insurers have begun to provide insurance products, which can be accessed on computers or smart phones. This has naturally seen to the rise of e-insurance business. The advantages of e-insurance have been identified as easy, quick and convenient, thus attracting customers. For the insurer, it is argued that it reduces managerial and administrative costs, eliminates costly and time-consuming stages and develops information structures and managerial data through the process of business automation.

However, the process is accompanied with disadvantages, which turn out to be detrimental to the customer. While technology has moved swiftly towards improving insurance business, the consumer rights have suffered. It is arguable that consumer rights have remained stagnant or have been wiped up by technology. E-insurance and consumer rights have grown apart to the extent that is arguable that technology has ensured that consumers continue to have negative impressions of insurers.

Consumer rights
Due to the complexities of acquiring an insurance policy and claiming it, the insured leaves believing that insurance is what you buy and hope never to have to use. Such complexities have not been addressed or erased by the digital form of acquiring insurance. The following areas are a cause of concern for consumers of insurance products;

1. The broker/agent
E-insurance ordinarily results in insurers dealing directly with consumers. Doing away with brokers/agents (intermediaries) has a negative influence on consumers, who may find it difficult to understand and appreciate the proposal form. An insurance proposal is central to the formation of an insurance contract. A broker provides the consumer with professional assistance in acquiring insurance products.

Dealing directly with the consumer takes away the protection that a broker provides, as a broker can be sued for professional negligence. Purchasing insurance in the traditional form is complicated for an ordinary consumer and having to deal with an insurer directly when purchasing e-insurance becomes onerous.

2. Electronic financial transactions
E-insurance invariably results in electronic financial transactions and the provision of personal details. Zimbabwe has no legislation that deals with electronic financial transactions. There are no guidelines or regulations on electronic financial transactions and neither is there is a guarantee on the protection of the customer’s private details.It is no surprise that electronic transactions are prone to hackers and fraudsters such that client confidentiality is threatened. Consumer’s confidential information at the time of contracting and in future is a continuing security worry.

3. E-insurance gives rise to the e-standard form contract.
This limits the bargaining power of the customer. Standard form contracts are contracts that are drafted in advance by the supplier of goods or services and presented to the consumer on a “take-it-or-leave-it” basis, thus eliminating the opportunity for negotiations. They contain a common stock of contract terms that tend to be weighed heavily in favour of the supplier and to operate, limit or exclude the consumer’s normal contractual rights and the supplier’s normal contractual obligations and liabilities. These e-standard form contracts are even more prominent in e-business as they reduce the ad ministerial task of redrawing contracts for every individual party.

Standard form contracts have become more prolific in business, yet there is no form of protection for consumers. The greatest disadvantage of the e-standard form contract is that the insured does not have equal bargaining power in comparison to the insurer. The insured is expected to sign a contract that is already set for them, with terms that they are perhaps unfamiliar with.

In Zimbabwe, any legislation on general consumer law was last promulgated in 1994 and is, lagging behind, yet technology continues to evolve daily. Regrettably, the Insurance Act was last amended in 2004 and no legislation has been promulgated to deal with the challenges potentially posed by e-insurance. Insurance legislation worldwide is continuously being modified to accommodate e-insurance.

E-insurance requires modern e-commerce legislation that permits the insurers and the insured to safely and unambiguously exchange information.The establishment of an insurance contract requires the exchange of large amounts of data, often of a personal nature. While the electronic medium is perfect for data transfer, consumers often worry about the security of their private information.

The United Nations Guidelines for Consumer Protection advocate for the promotion and protection of consumers’ economic interests such that governments are encouraged to “ensure that consumers are protected from such contractual abuses as one-sided standard contracts and the exclusion of essential rights in contracts.”

•  Nobert Musa Phiri is Partner Muvingi & Mugadza Legal Practitioners-Attorney of the Supreme Court and High Court of Zimbabwe: He can be reached on [email protected]

Michelle Chikomo is a 4th year Law Student with Rhodes University in South Africa