Econet Wireless under investigation

THE Insurance Pension Commission (IPEC) yesterday said telecommunications leader Econet Wireless was being investigated after it emerged that it was providing insurance services for farmers without a valid licence.

The IPEC probe comes at a time when Econet has launched a micro-insurance product, EcoFarmer, to provide crop cover against bad weather conditions.

IPEC commissioner Manett Mpofu said the telecommunications company was not licensed in terms of section 7 of the Insurance Act to offer any insurance services.

"With respect to their weather index micro-insurance product (EcoFarmer) advertisements in the print media, it is not clear from the same advert whether Econet Wireless is the underwriter of the product or a duly registered insurance company using their mobile platform to offer the product. Meanwhile, investigations into the matter by the commission are underway," Mpofu said.

The insurance regulator further revealed that early this year, Zimnat Lion Insurance approached IPEC with the weather index product in a bid to solicit input into the same product.

"When the presentations were made, Zimnat indicated that it intended to offer the micro-insurance product through the Econet Platform and was going to incorporate our input to seek the necessary approvals," Mpofu said

"We have also since asked Zimnat Lion Insurance Company to confirm if they are underwriters of the product and they have professed ignorance on who the underwriter is."

But, Econet services chief executive officer Darlington Mandivenga said the bottomline was that Econet had in fact engaged an underwriter, who was working with IPEC.

"EcoFarmer is currently in its initial phase of registering farmers for the service while awaiting the finalisation of relevant regulatory requirements related to the appointment of the underwriter to partner in the venture. We are excited with the opportunity to offer weather-indexed cover for the benefit of our farmers as soon as IPEC has given its approval," he said.

Econet Wireless corporate communications manager Rangarirai Mberi also said insurance was a component of the new product and sent a statement on the product to NewsDay.

The statement showed that the insurance product was earmarked for Mashonaland East province as a pilot project and would run between November 2013 and March 2014.

"Under the Econet scheme, which is part of a programme known as EcoFarmer, a farmer can buy insurance for as little as eight cents per day, which is deducted from their prepaid phone account during the agricultural season. If the rain does not fall, resulting in a drought, the farmer will be given as much as $100 for every 10kg seed pack planted," Econet stated.

Econet further said that if a farmer is hit by a drought, $100 will be paid for every 10kg seed pack planted.

Insurance experts, however said Econet should be licenced by the regulator if it was to offer the service as most players pay fees to provide insurance services.

Econet in 2010, entered into insurance services partnership with FML and Namibia-based Trust Co, but when the deal collapsed after the withdrawal of Trust Co, 1,2 million subscribers were left stranded.