Call to constantly review insurance policy values

PANASHE CHIKONYORA

Short term insurance policyholders should constantly re-evaluate their assets, review policy values and premiums to maintain insurance covers at “replacement or market values”, the Insurance Council of Zimbabwe (ICZ) has said.

Apparently, most policyholders assets are now underinsured, especially those covered in Zimbabwe dollars. Underinsurance is when the sum insured on your insurance policy is not enough to cover the full costs of the policy terms.

In an interview with Business Times, the ICZ marketing and public relations manager, Ringisai Batiya said: “Policyholders who do not review their covers are affected by the average clause applied when they lodge claims. This is a clause in the insurance contracts which allows an insurer to determine the payment for damages or loss in proportion to the value insured.

Hence, underinsurance will result in a partial settlement of a claim.”

However, most insurance policy holders are withdrawing from their policy contracts as they claim they cannot keep up with the rising premiums.

“My policy lapsed last month after I had failed to pay due to unemployment. We were retrenched from work last year and I have been jobless for almost a year now and l am surviving on piece jobs, which is almost impossible for me to join an insurance policy at the moment.

However, l incurred a big loss as they did not refund me,” a policyholder who declined to be named told Business Times.

Batiya said there was need for constant tracking of the foreign currency rates when charging ZWL insurance premiums for insurers to stay afloat in the hyperinflationary.

“Through periodic reminders, insurers are encouraging policyholders with Zimbabwean dollar policies to peg the value of their assets against the ruling foreign rates. The notifications are in addition to the public awareness campaign carried out by the ICZ when the country began to experience a rapid rise in inflation,” she said.

Regulations that allow insurance companies and pension funds to carry out business in foreign currency were promulgated through the statutory instrument (S.I.) 280 of 2020, which amended Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations.