Some local insurers may be failing to provide full disclosure around their products resulting in a lot of misconceptions and mistrust around insurance, the Insurance Council of Zimbabwe (ICZ) has said.
The short-term insurance body said it is concerned over the lack of awareness of the public over the motor insurance products on the market and their benefits.
“Most people lack appreciation of the need and use of insurance as a means of preserving their assets. Motor insurance contributes 40 percent of the short-term insurance’s gross premium.
“Unfortunately, the public has inadequate information on types of policies available as well as how to manage their policies to enjoy full benefits of having insurance policies,” said ICZ.
“This lack of knowledge is also attributed to the low uptake of the superior insurance covers like the Full Third Party and Comprehensive motor insurance covers.
“For example, there is misconception over the purpose of the Third Party Motor insurance, which wrongly believed to be just for vehicle licensing yet it actually provides compensation in the event of an accident. There is also the Full Third Party Motor Insurance which is barely known to the public.”
The ICZ has since embarked on a nationwide campaign aimed at raising awareness on the types of motor insurance polices, the insurance benefits as a risk management tool as well as the claims processing requirements.
ICZ chief executive officer Tendai Karonga, acknowledged that consumers have lost confidence in insurance due to lack of knowledge or bad experiences with the claims processes.
“Confidence over insurance services continues to be low with the public complaining about non-payment of claims by insurers. Insurers have been blamed for benefiting from premium collections yet abdicating on their promise to pay claims hiding behind insubstantial reasons leaving policyholders frustrated,” he said.
“The lack of knowledge and mistrust over insurance has kept the insurance’s contribution to gross domestic product (GDP) low at 2,97 percent. This has greatly compromised the insurance’s role in the national socio-economic development.”
Insurance regulator, the Insurance and Pensions Commission (IPEC) has warned firms that it will terminate dubious policies.
“We will not hesitate to cause product termination, particularly those we view as irrelevant,” said IPEC Commissioner Dr Grace Muradzikwa recently.
Meanwhile, the body said it is working with short-term insurers and insurance brokers around the country to ensure that existing policyholders get the deserved service and assist in areas where challenges with service delivery are identified.