Tendai Biti, a Member of Parliament for Harare East, has condemned the Insurance Bill, saying it does not protect insurers against insurance companies.
Biti said insurers suffered huge losses in 2008 when the Zimbabwe dollar collapsed and in 2019 when their insurance assets were unilaterally converted from the multicurrency regime to the Zimbabwean dollar.
While speaking in Parliament, Biti condemned the Insurance Bill saying it did not address the losses incurred by insurers. Open Parly cites him as saying:
I wish that these three Bills, one of them is an Act, the Insurance Bill that we are discussing today, the Pension and Provident Fund now an Act and the IPEC Bill that we just parked in Committee Stage. I wish that we have had an opportunity of synchronised debate by the National Assembly because there is interconnectivity between the three Bills.
We have a crisis of the loss of values. We have the crisis of an insurance industry that is undisciplined that is extractive, that is greedy. We know this as a statement of fact Madam Speaker, because of the findings of the Justice Smith Commission of Inquiry Report that was published in March 2017. That Commission of inquiry report is an indictment against the insurance industry. It accused and found against the insurance industry, particularly two houses, the Old Mutual and the First Mutual, rampant excessive aggrandisement, consumerism and conspicuous consumption. They live in Borrowdale in houses where engineering has said you cannot build a house but they will excavate. They drive Lamborghinis and other fancy cars parked at Sam Levy’s Village at the expense of insured individuals.
Thousands and thousands of insured workers have been pauperised by the insatiable greed of insurance actors in the insurance sector. The question that then arises Madam Speaker, is that, does this Bill that we are considering address and deal with the mischief that is there in Zimbabwe? Does an insured person who lost his value or her value as a result of the shenanigans, the omissions and the commissions of these players have her question answered?
I submit Madam Speaker that her question is not answered. The mischief of the collapse of the insurance industry has not been answered in this particular sector. Hon. Nduna is here. He will tell you that there are over two million vehicles in Zimbabwe and of those, each one of them is obliged by operational flaw to pay compulsory third-party insurance. Millions and millions of dollars of third-party insurance are collected but the economy has nothing to show for it except expensive houses in Borrowdale, in Ward 18, represented by Hon. Rusty Markham. It is not good enough. So we need radical comprehensive transformative reform of our insurance sector.
He proposed the following:
i). The creation of structures of good governance inside the insurance sector. It should not be easy to own an insurance house.
ii). The strong role of the regulator considering that the Justice Smith Commission of Enquiry Report found that 19% of the loss was due to a weak regulatory framework. He said the insurance sector must give regular reports to the regulator.
iii). The conduct of insurance. Insurance companies have been allowed to create wealth which should not have passed to the owners of policies. They have been allowed to form and hedge against inflation through the formation of property companies. He said all assets made and created by pension insurance contributions must fall into the pot and the insured person must benefit. This must have a retrospective application.
iv). Insurance companies’ expenses must meet a certain minimum threshold, say not more than 3% to avoid a situation where they use the money for personal enrichment.
v). Biti also said the Act gives too much excessive power to the Minister instead of giving it to the regulator, IPEC.
vi). He also said the Act in Sections 80, 81 and 82, speaks about married persons but the Act does not define what a marriage is. He said the silence creates a problem for wives/women or partners in unregistered customary law unions since the normal definition of a marriage is a general law marriage which is now section 5.1 of the Marriages Act.
vii). He also said the insurance policy must be honoured in the currency that it was being paid considering that Zimbabwe has a currency that is very volatile.
viii). He proposed that there should be a personal liability on bankers because they are handling millions of people’s money.
ix). Insurance Pensions Commission (IPEC) must be empowered to make Insurance Companies disclose investments that they have made to avoid a situation where they invest in risky businesses.