TINASHE MAKICHI
An influx of expensive cars in the economy has become a new litmus test on local insurance companies’ capacity to provide insurance cover amid revelations that some clients are now opting for non-life insurers in South Africa for cover.
The past year has seen individuals importing an array of expensive vehicles with values ranging from US$350,000 to US$1.5m at a time when the government in June last year scrapped the multi-currency regime and restored the Zimbabwe dollar which had been demonetised in 2015.
Business Times is however informed that local short term insurers are now exploring potential partnerships with international players to protect their balance sheets.
Champions’ Insurance managing director Stenard Maphosa told this publication that his firm has not yet been approached by a client with a vehicle asset of US$1.5m but once had a vehicle in its books which was insured for US$1m after working with its partners to have the vehicle fully covered.
“I may not speak about the way other companies view the issue, but if we are approached we can put in place the insurance cover, and if the market cannot offer capacity, we can get it on the international market,” Maposa said.
“We do place on the international market the balance of what the local market cannot offer, and in such instances we go through Insurance and Pension Commission as well as the Reserve Bank of Zimbabwe, so that we can be authorised to move part of the premium abroad.”
Insurance Council of Zimbabwe technical manager Nicholas Sayi confirmed receiving the reports but noted that the country’s insurance market has enough underwriting capacity for any type of an asset whether in foreign or local currency.
“There have been such reports but I can assure you that the local insurance market is able to cover a car of any value.
Even our underwriting capacity is enough for any type of vehicle,” Sayi said.
This situation is, however, putting to test the capacity of local non-life companies to provide insurance cover on these vehicles. Some companies’ balance sheets are too small that they are at risk of cracking in the event of a claim.
A number of Zanu PF linked politicians and businesspeople have been importing luxury cars such as Lamborghinis and Bentleys.
Prominent of the list was the importation of a Lamborghini worth US$500 000 by MP Justice Wadyajena and the US$1.4m imported by flamboyant businessman Genius Kadungure.
NicozDiamond managing director David Nyabadza said the market has enough capacity to cover any form of assets but there are reasons where insurers may not be able to cover.
“I can confirm that the market does have adequate capacity to cover such vehicles.
For the record, the market already insures other assets of much higher pecuniary value like buildings, plant, aircraft, and machinery.
There are a number of reasons however where insurers may be unable to offer cover,” Nyabadza said.
He said insurers may not be able to cover because those vehicles may be foreign-registered, meaning they have temporary insurance for one month and, thereafter they are supposed to be registered locally and insured locally.
Nyabadza said they have noted requests to insure these vehicles regardless of these conditions.
He said in some instances insurers have found it difficult to insure those expensive vehicles because as they do not have the required documentation from the Zimbabwe Revenue Authority.
“As a risk management measure insurers will insist on only insuring vehicles that have been regularly brought into the country.
Requests to insure in foreign currency without the necessary regulatory approvals in violation of SI 142 of 2019 can also be a challenge,” Nyabadza said.
Grace Mugabe’s son Russell Goreraza in 2017 imported two Rolls Royce Phantoms at a combined cost of about £4m.
