Insurance Association of Zambia – IAZ has called for an end to externalization of forex through insurance premiums when these policies and risks can be adequately covered by the insurance industry and its association members in Zambia.
IAZ President Paul Nkoma sated that “each year, millions of kwachas and dollars are externalized because of companies and individuals that seek insurance cover outside the country when it can be provided locally as stated by the law to best support the local Zambian insurance businesses, local employment expansion and further grow the local economy”.
Speaking at a press briefing attended by the Zambian Business Times – ZBT ahead of the insurance week in Lusaka on 16 September 2019, Insurance Association President Paul Nkoma said it is important for the country to understand that financial vulnerability is a major driver to obtaining insurance cover.
The Association has further bemoaned the increased tendency by some insurance policy holders to default on the payment of insurance premiums adding that the sector is losing huge sums of money to Zambian companies and individuals that seek insurance services outside the country when it can be provided locally.
Nkoma said continued installment payment defaults have a negative impact on the overall performance of the sector hence the need to change from defaults on the payments of insurance services if the sector is to add value to the country’s economy.
He further noted the need by the Zambian government to plan for various risks that threaten the financial stability and defend the economic gains achieved.The Association has stated that obtaining insurance is a practical form for financial protection that guides the country and its citizens against excessive expenditure when misfortune strikes.
He added that the act has become a major challenge in the insurance sector as many times, insurance is given on credit or installment plans, hence the high rate of installment payment plans default has a negative impact when it comes to paying claims, financial reporting and overall instability for both the insurance companies and companies covered.
At the same event, Pensions and Insurance Authority – PIA acting registrar Titus Nkwale said the authority is aware of complaints of unfair treatment of customers by some insurance cover providers and that it will put in place measures to ensure that customers are fairly treated.
Insurance penetration in Zambia has continued to increase over the years with the imbedding of weather index insurance driving a better uptake especially in the Agro sector. Micro insurance is also has huge potential owning to the large informal sector in Zambia, like most African countries.
