Zimbabwe’s funeral assurance industry, which in an unusual step, has been issuing out policies on credit has been hit by large premium debtors triggered by policyholders’ low income levels, Business Times has learnt.
In its latest industry report published this week, the Insurance and Pension Commission (IPEC) disclosed that the funeral assurance sector’s debtors book has deteriorated by 250 percent in the three months from January and March this year to $10,71 million from $3,06 million reported at the end of December last year.
The deteriorating situation in the sector, IPEC indicated that it was threatening the viability of the funeral assurance sector, which now had huge debtors in their books. Some of these had resulted in high provisions for doubtful debts or complete write-offs.
“As at March 31, 2018, the assurance industry had premium debtors amounting to $10,71 million, a deterioration from $3,06 million reported as at December 31, 2017.
“Of the above debtors 32,43 percent were aged more than 90 percent, thus making them inadmissible for the purposes of regulating solvency in terms of Statutory Instrument (SI) 95 of 2017,” IPEC said.
People are struggling as far as disposable income is concerned, insurance experts told Business Times. And generally, when policyholders hit hard times, they said because insurance is not on top of their priority list due to other pressing demands on the low incomes, the first service to be taken off the shopping list by households is insurance.
Recently, IPEC said to deal with the challenge of high premium debtors, the funeral assurers should write business on a strictly “no premium, no cover” basis.
IPEC reminded industry players that SI 95 does not allow assurers to repudiate claims on account of the premiums not having been paid.