Relief for insurance firms
LIVINGSTONE MARUFU
Government is said to have agreed to allow insurance companies to continue handling the third-party motor vehicle insurance scheme, provided they contribute a portion of the proceeds to the Treasury, in a move that could be a huge relief to the sector, it has been established.
Players in the insurance sector told Business Times this week that the sector was ecstatic since they believed the government’s original intention to take over the scheme was going to cripple the sector.
“It is a sigh of relief for insurance players. The insurance sector is happy that the government has allowed the firms to continue with the third-party insurance scheme as the takeover was going to cripple the sector. The government understood that its proposed move was going to have a calamitous effect.
“Instead of the total take over, the government will get 20% of the total third party funds collected,” one source told Business Times.
Business Times was informed of the same by a number of other insurance players who also asked to remain anonymous.
Contacted for a comment, the industry regulator, the Insurance and Pension Commission (IPEC)’s director of insurance, Sibongile Siwela, stated that discussions on the matter were still underway.
“There are ongoing consultations on the issue of third-party insurance. We will only be able to provide an update after these discussions are concluded,” Siwela said.
Professor Mthuli Ncube, the minister of finance, economic development, and investment promotion, recently stated that the administration was seriously contemplating letting the players in the insurance industry continue handling the scheme.
Industry players said putting the third party motor vehicle scheme under State control could have wiped out the insurance industry.
It also coincides with the Parliamentary Portfolio Committee on Budget, Finance, and Economic Development chairperson, Clemence Chiduwa, opposing the government’s initial plan.
The move to take over a third party motor vehicle insurance scheme, according to him, was not viable.
