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Row over insurance tender

…As Health ministry sidelines players

NDAMU SANDU

Zimbabwe’s brokers have taken the Ministry of Health and Child Care to task after it shifted goalposts in a move which excludes the sector from bidding to provide insurance services, Business Times heard this week.

In February, the ministry flighted a tender in which it sought firms to provide insurance cover for motor vehicles, motorcycles and ICT equipment. The tender closed last month.

The procurement notice stipulated that interested bidders must be registered for a period of not less than one year, must have a certificate of incorporation, must have a vendor number, must be registered with the Procurement Regulatory Authority of Zimbabwe (PRAZ) and attach proof, must have a valid tax clearance and must have VAT certificate.

Brokers were shocked when they saw a clause in the bid document which said bidders should be underwriters or insurers and brokers or intermediaries would not be considered.

The exclusion of brokers from the tender drew the ire of the constituency which approached PRAZ to intervene.

In correspondences seen by Business Times, the Insurance Brokers Association of Zimbabwe (IBAZ)   told PRAZ acting CEO Clever Ruswa they had been excluded as has become the norm where government departments deliberately exclude brokers when it comes to insurance tenders as discussed during the PRAZ/IPEC workshop of August 18, 2020.

IBAZ said one such an instance of exclusion was the tender in which they have incorporated a clause which reads ‘Bidders should be underwriters or insurers. Brokers or intermediaries will not be considered for this tender’.

“As advised by your office, we are to report such practices as they violate the principle of fair competition. We therefore present this case as one of the many cases where government departments are not being fair to us despite the fact that we are professionals in this field and play a very crucial role in the whole insurance value chain,” IBAZ wrote in a February 12, 2021 letter.

“We have had situations like these before, where after all the tender process is finalised, we discover that a big portfolio such as this one would have been awarded to an independent agent to handle at the expense of qualified professionals in this field. One then wonders whether there is some degree of professionalism in this whole issue.”

In a March 5, 2021 letter Ruswa replied: “The Authority is currently engaging the procurement entity to seek clarity on the restriction, and will revert to you after considering the procurement entity’s submission to the Authority.”

PRAZ had not responded as of yesterday with the tender closing today.  Running out of time, IBAZ approached Health and Child Care permanent secretary Jasper Chimedza seeking clarification on the exclusion of the industry in the tender.

“Our concern emanates from item 6 of the Evaluation criteria which stated that brokers were not to be considered on this particular tender,” IBAZ wrote in a March 23, 2021 letter.

IBAZ said brokers are registered entities under the IPEC Act, Companies Act and PRAZ under category Insurance and Brokerage Services (S1006) and eligible to participate in public procurement.

“Our main worry is to understand if there could be valid reasons warranting the exclusion so that in future corrective and mutual engagements can be done for the benefit of both parties and the general insurance consuming public,” IBAZ wrote.

No response came from the ministry, sources privy to the developments said last night. Business Times could not get a comment from the Ministry of Health by the time of going to print last night.

“This tender stinks to high heaven. It is dead give-away that the tender was tailor-made to suit a certain provider,” an industry executive said yesterday.

The concerns by brokers come as other short term insurers said the path was cleared for a rival firm (name supplied) to win the bid.

“It is clear that they want one company. ZACC and SACU have to investigate this especially on the change of the requirements. The advert placed on 7 February 2021 in the newspaper did not state that bidders have to submit confirmation of credit rating by a ratings agency. We did not expect that someone would shift the goalposts,” the executive said.

Ruswa asked for questions in writing but had not responded at the time of going to print. 

There were 32 operating insurance brokers as at September 30 last year.

For the third quarter ended September 30, premium income by insurance brokers increased by 785% to ZWL2.377bn in nominal terms from ZWL268.68m in the same period in 2019, according to an industry report.

Net brokerage commission for the third quarter of 2020 amounted to ZWL$341.99m. IPEC said the increased volume of business recorded by insurance brokers during the period under review was on account of gradual premium increases in line with inflationary trends.

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