Insurance in Zimbabwe- to be insured or not?

RUTENDO MANHIMANZI

The question of whether to be insured or not is one that often crosses one’s mind.

Just as planning for tomorrow provides peace of mind, so does securing insurance coverage, whether for personal or business needs.

The unexpected can strike at any moment.

Imagine a tree falling on your house, an emergency call from school that your child is seriously injured, the business has been broken into, and the farm is on fire. What a loss! Where do you start when you have no savings, how do you recover and who do you turn to. Of course, insurance can cover all these and give you peace of mind.

Insurance can be subjected to various definitions for ease of understanding. It can simply be described as a means of safeguarding or protection from financial loss. Legally, it can be defined as a contract between an individual or a business and an insurance company to indemnify or give protection to the insured from financial loss from predefined risks in exchange for a premium. Some examples of the risks include but are not limited to accidents, illness, fire, theft, natural disaster, or other unexpected circumstances.

The main thrust of the insurance industry is to safeguard the assets of its policyholders by transferring risk from an individual or business to the insurance company. Insurance companies act as financial intermediaries in that they invest the premiums they collect to provide this service and make a payment or replacement when need arises.

In Zimbabwe the insurance industry is governed by several laws and regulations. These include but are not limited to;

• Insurance Act [Chapter 24:07] – this is the primary legislation that deals with governance of the insurance industry in Zimbabwe.
• There’s also the Insurance and Pension Commission Act [Chapter 24:21]- this Act establishes the governing body or authority which is the Insurance and Pensions Commission (IPEC), which is responsible for supervising and regulating the insurance industry in Zimbabwe.
• The Zimbabwe Stock Exchange (Insurance Listings) Rules- these rules govern the listing of insurance companies on the stock exchange.
• Insurance Regulations – these regulations are issued by IPEC and provide a detailed guideline on the operation of insurance business in Zimbabwe.

Insurance offers not only freedom from the financial and emotional burden of loss but also the freedom to pursue innovation, investment, and creation of value. The industry is a strategic partner in protecting value and encouraging opportunities for growth.  The insurance industry forms an integral part of the global financial market, with insurance companies being significant investors. Insurance policies are generally renewed once a year. Different policies have different terms and conditions, so make sure you know what the terms and conditions of your policy are. It is important to understand exactly what your insurance policy covers when you buy it.

The insurance contract itself is usually called a policy. The policy must clearly outline who or what will be covered under the contract, the premiums to be paid, circumstances under which payment or payout against loss will be issued by the insurance company, the recipient of the payment, and the amount to be paid.

There are various types of insurance, the most commonly known are vehicle, home, life, health and travel insurance. In Zimbabwe the most common and known or easy to comprehend is the motor vehicle insurance. This is the reason why there is a high proportion of consumers who only buy, for example motor vehicle insurance, because it is a regulatory requirement to do so without understanding the benefits of having such insurance cover.

Why is insurance important? – benefits of being insured

Insurance aids to financially protect you, your dependents, your business and assets from emergencies, unexpected expenses, and losses. It mitigates risk by transferring potential financial burdens from the insured to the insurer. An insurance policy can assist you to cover expenses related to routine healthcare, property damage from a natural disaster.

The floods that have befallen us, the fires in America and the droughts are examples of the unexpected risks that can strike at anytime, anywhere without notice. For the insured they have peace of mind. When it strikes, Insurance comes forth to hedge the losses insulating you against the shocks of the losses. In turn it thus provides economic protection as it protects you against these unexpected losses that can affect your finances. Insurance also helps one to maintain your standard of living as it protects you against any possible loss and the insured business will continue to thrive free of any fears of any loss. Businesses can also protect business assets and ensure business continuity.

Zimbabwe being an agricultural state, farmers ought to be aware that they can as well have their crops insured in light of the harsh and unstable weather phenomenon being experienced in the past years. The introduction of the livestock tax also implies that a farmer ought to take up an insurance policy for their livestock and safeguard them in the event of the unfortunate. In some jurisdictions the insurance policy can be used as security when applying for a loan.

One of the most important benefits of life insurance is that it enables you to save and grow your money. It gives one investment opportunities because some insurance products like life insurance can provide cash value accumulation. You can use this amount to meet your long-term goals, like buying a house, growing your business and even saving for your children’s education and securing their future. It can also be useful for retirement planning.

Overall, the purpose of insurance is to help provide security, stability, and support in times of need. Having insurance may allow you to live your life with fewer worries, knowing you have a financial safety net in place.

How does insurance work?

Simply put, one pays a premium (usually monthly payment or some annually) to the insurance company, and in exchange, the company will be responsible for covering any emergencies or losses that are commensurate with the policy conditions. These can include but are not limited to any covered accidents, routine health visits, death, education and many other situations.

Once you have subscribed to your plan of choice and it has taken effect, you are covered until you cease the payment of your premiums or when your policy ends, for some they mature and become eligible for monthly payout or upon demand or turn it into an investment. Whether one goes for a doctor’s routine visit, or experiences damage to your home or car, the insurance company will be responsible for the payment of the service provided, make a replacement for the loss or damage and pay for any repairs done. In the case of medical expenses/services, the insurance company can either reimburse you directly or pay the service provider. However, in some instances, before you receive reimbursement from your insurer, you’ll first need to reach your deductible.

It is critical to note that the type of policy taken out determines the services to be rendered once the unfortunate occurs. Hence before taking out a policy, one needs to be fully aware of their intended goal and whether such a policy meets their needs.  It is good to seek assistance in understanding terms and conditions of policies to avoid ambushes and surprises.

Filing a claim

Some policies require that you file a claim for the money utilized for a covered process. That means you’ll have to submit a request to your insurance company in order to receive a payout. Information on how to file a claim is usually explained in your policy documents. In some cases, the service provider you visit like doctors, specialists, dentists will handle communications directly with the insurance company and receive their payout for services rendered.

Key takeaways

• Insurance is a contract between an individual or business with an insurance company to provide financial protection and mitigate the unforeseen risks.
• There are various types of insurance available to cover all important assets whether material or immaterial.
• Before signing up for a policy, one should carefully review what it covers and what it doesn’t. Insurance inclusions specify the risks or events the policy protects/covers against, while exclusions outline the circumstances under which coverage will not apply.
• Key components to consider when comparing insurance policies are the deductibles, affordability of premiums, insurer’s settlement history and their financial stability, customer reviews and policy benefits to yourself or company.
• During open enrollment, you may be able to get certain types of insurance.
• Anyone can take out an insurance policy that suits their financial capacity.
• Evaluate your lifestyle, financial obligations, and risks in order to determine the level of coverage you need. For example, a young and small family may prioritize life and health insurance, whilst a homeowner might choose comprehensive home insurance.

• Reading the fine print of any policy ensures that you are fully aware of the policy’s scope and helps avoid unpleasant surprises when filing a claim.

Conclusion

Insurance is something many business owners and individuals don’t want to think about or see as an unnecessary expense. However, insurance is there as a safety net for new opportunities whilst hedging against any risks and losses. Seeking knowledge on how insurance works guides one on which policy to choose. Three critical components to assess any insurance type are the premium, policy limit, and deductible.

Insurance should not be viewed as a planning tool for life’s worst scenarios only but rather as a financial plan’s safety net. Subscribing to the right insurance at the right premiums protects you, your family or business from unforeseen events and provides a baseline financial buffer. Insurance can even be used to diversify your portfolio and reduce your tax burden. Anything and everything can be insured, take the next step and have peace of mind.

Rutendo Manhimanzi is a registered Legal Practitioner and practices under the law firm Ruzvidzo Legal Counsel. She can be reached on +263 773 589 263 or email rmanhimanzi@yahoo.com