Zimnat emerge with zest from economic downturn

The insurance industry suffered unprecedented negative effects from the economic contraction and hyperinflation that besieged Zimbabwe in the past decade. Insurance companies had to coin survival strategies as inflation ate into policies and underinsurance was the order of the day.

Insurance Companies had to use the law of averages, frequent adjustments and revaluations to cater for the gap created by inflation. These measures, though, were not sufficient as things changed rapidly.

In an interview Zimnat Chief Executive Officer Mr. Mustafa said that people lost respect for insurance hence shorter terms had to be introduced.

"As things were getting out of hand, a risk transfer mechanism was reached. Companies had to invest certain amounts of money which Zimnat would manage and safeguard the investments. This was called the 'Alternative Risk Transfer' product."

With the economic stabilization, Zimnat Lion and Zimnat Life are back to their original business of insurance; that is the transfer of risk from an individual to a group and the sharing of losses.

Mustafa stressed that insurance is the economic device for reducing and eliminating risk, bringing peace of mind to individuals.

"From a small premium, one is covered from multiple losses, using the pooling concept," he said adding that without insurance, individuals would need to keep large sums of cash to cover risk.

"This would mean people would not be able to cover the risks associated with whatever assets they own."

He further commended the work being done by pension funds and policies, which he said is a way of individual and group income protection, entailing educational and investments policies.

"One has no large pool of funds to cater for tomorrow's education and cannot keep large sums of money on themselves as investments. Thereby individuals need to consider such policies as to create liquidity and use the pooling effect to provide funding to individuals", said Mustafa.

Pension funds give confidence that the future is bright. Construction projects, such as the Joina City building, undertaken by a pension fund act as a barometer of economic growth.

Zimnat Lion and Zimnat Life strive on the promise of delivering value to and meeting expectations of policy holders. At Zimnat, investment policies are taken seriously.

Mustafa said that expense indices at Zimnat are well within the allowed levels and its presence in the entire insurance sector makes it unique in meeting claims as and when expected to do so.

"It must be known that insurance policy holders are now aware of such things as the expense indices, therefore should never be taken for granted.

"The insurance industry has a bad reputation because of mistrust from clients when making claims. Some insurance companies are in the habit of rates undercutting, and we say it is unhealthy for the sector," challenged Mustafa that at Zimnat, "we pay genuine claims, which is what has kept the company afloat over the years. Thus we provide capacity and skills to the market. We invite every Zimbabwean to go for insurance products as we say from a low premium; one can protect their very life investments."

The insurance sector has the responsibility to capitalize the economy.

For Zimbabwe the culture of insurance is still very much alive in the country unlike in other countries in the region like Angola, where it has virtually died.

The sector has experienced a growth of 52.5%, from 76.7m to 117m premiums for short term insurance from 2009 to 2010.