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Walter Muchinguri : Assistant Business Editor

The Insurance and Pension Commission will soon start deregistering short term insurance companies that undercut rates as the practice has reached alarming proportions, IPEC head of prudential supervision Mr Pupurai Togarepi has said. Mr Togarepi told delegates attending the Insurance Institute of Zimbabwe Winter School that some of the rates that were being charged were unsustainable.“Two months ago we raided some agents and when we looked at some of the cover notes that they had issued we discovered that they were charging premiums as low as $20 to $25 for third party insurance instead of $35.

“It seems they just want to collect money to pay their salaries because the amount is not enough to settle claims. These same companies that are undercutting rates are the same companies that are failing to pay claims.

“As a regulator we will not hesitate to weed out the bad apples in the industry,” he said.

Mr Togarepi said that the short term insurance business hinged on successfully paying out claims when they are due.

“It is better for a short term insurer to fail to meet their minimum capital requirements and be able to settle their claims on time,” he said.

He added that the regulator was also concerned by incidents where some insurers were helping themselves to premiums paid by clients.

“Premiums should be valued because that’s not your money but it is there to pay the client when they make a claim but we have some insurers who are using that money to buy top of the range cars and other assets. That is not insurance that’s kindergarten insurance,” he said.

He added that it was important for the insurance companies to be ethical in their conduct as the commission was shifting from a regulatory approach to a supervisory approach.

“There is a paradigm shift in our approach from regulatory to supervisory so that we allow for innovation and development but the approach will only work well if you are ethical in your conduct and this means you need to return to the basics of insurance.

“Supervision will however, not replace regulation but it will merely be the frontrunner to regulation,” he said.

Mr Togarepi said that the paradigm shift to supervision was being influenced by the need to ensure an ease of doing business in the insurance sector which ties in with a broader national programme to improve the ease of doing business in the country.

Meanwhile Jupiter Drawing Room & Partners (South East Africa) group CEO Mr Denford Magora said the current environment calls for innovative managers with an entrepreneurial mind in the insurance sector.

“The current environment calls for innovative ideas that stretch from product development to systems innovation to marketing and messaging innovation.

“The biggest challenge though is training all our employees to be entrepreneurs,” said Mr Magora who was presenting a paper on connecting innovation — being an entrepreneur, turning ideas into powerful results term insurers.