Insurance Journal July Edition Vol 4

Zambian Insurance Journal | 1

IAZ Magazine Issue 3.indd 1 4/30/15 2:00 PM

2 | Zambian Insurance Journal

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3. Editor’s note

5. President’s note

6. Microinsurance:

Serving the masses

12. The promise

16. Bargain of the decade

19. Avoid frustration:

Read your policy

24. Why use insurance intermediaries?

26. Is insurable interest an endangered species?

28. 4 steps to lodging a succesful motor claim

32. Facets of Microinsurance

40. Microinsurance and mobile network platforms

44. Home insurance

47. Top job 2015

48. Insurance underwriting: Fantastic career

50. ZCPIT - New era in

insurance training

53. Photo focus

57. List of insurance companies

Editorial TeamTrevor JengajengaMweene MongaRaymond KufekisaDenson LungaJacob ChirwaKambole Chituwo

HEALTH ZAMBIA

HEALTH ZAMBIAScan the QR code or visit

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Insurers Association of Zambia is an organisation comprised of all licensed Reinsurance and insurance companies in Zambia. The Secretariat is found on the 3rd floor of Finsbury Park, Kabwe roundabout, Lusaka.

Post Net Box 95 | Private Bag E610 | www.iaz.co.zm

Mwaka Mwila Administrative Assistant Insurers Association of ZambiaMobile: 0966/55 345 100Tel: +260 211 238704Email: [email protected] [email protected]; [email protected]: www.iaz.org.zm

Designed by

CONTENTSJune 2015

57 48

Editor’s note The Zambian economic trajectory continues to be positive presenting great opportunities for the entrepreneurial mind. Each day we see a new business poster or billboard advertising the latest initiative or innovation. More and more Zambians are setting up businesses as a way to earn a living. This means, now more than ever, the community needs proficient risk management services to ensure that their wealth and indeed their investment is preserved. However, it is one thing to spot an opportunity; it is another to take full advantage of it.

On 25th May, we celebrate Africa freedom day. Even as we remember the regional struggles for independence in the last fifty or so years, let us reflect on how we can raise the standard of living in society and increase economic independence. Let our legacy be the impact we make on the economy.

If the nation took full advantage of insurance services, more resources can be focused on activities that will help the economy grow, rather than replacement costs or disaster management. But this dream can be achieved if there is wider use of Micro insurance services. We also look at the challenge of selling a promise, which is the nature of an insurance contract. We are reminded of the importance of household insurance and the need to read through policy documents to avoid false expectations and disappointment. We also shed light on a career in insurance, the recognition given to actuaries and the role of intermediaries in the industry. These issues continue to be topical in the industry and have been brought to the fore in this instalment of the Zambian Insurance Journal.

We hope that you will be informed and inspired by our latest issue.Enjoy the pages….

Christabel BandaExecutive Director



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The challenge in expanding the reach of Insurance coverage in Zambia is largely the challenge of commu-nication. The nature of insurance products requires clear and concise messages to reach the untapped seg-ment of society. We must explore every avenue, to find the most effective way of explaining the contractual benefits and obligations of insurance policies, in terms that do not alienate the target population. We also need to design and deliver services that match the needs and resources of the population on every level. That is where Microinsurance will play a big role.

The advent of Microinsurance on the Zambian market is timely and essential if we do not wish to forfeit the benefits of the economic strides made in the last decade. The need for prudent risk management and a provision to protect against unforeseen calamities cannot be overstated. While many find it tempting to overlook the low income segment of the economy, we must think in terms of volume. The low income sector represents more than half of the population. We simply need to revisit our business models to make Micro-insurance cost effective and sustainable.

Furthermore, we must not lose sight of the fact that when calamity strikes, the impact is felt throughout the economy. For instance, on the individual level, you frequently find one well established breadwinner in an extended family, who always provides for others during times of need or crisis. Those are resources which could have been reinvested to grow his business and employ even more people. If this family was to make full use of insurance products such as theft and fire cover, and funeral policies to cover expenses in the event of the demise of a loved one, there would be less pressure on the family member who has advanced in his business or career.

This scenario is repeated on the national level, where disaster mitigation can be a costly venture. Insurance products are there to transfer risk and limit the financial loss during an unforeseen disaster. Insurance on the micro and macro levels can ensure that the national economic gains are not lost due to unforeseen tragedy. We hope to see more insurance companies venturing to provide Microinsurance products, and also extend-ing coverage in the conventional insurance space.

Together we can help build the nation.

president’s noteShipango MutetoThe Insurer’s Association of Zambia2014 - 2016




The importance of insurance as a safety net in case of unforeseen disasters cannot be over emphasised, for both a business and an individual. We all face risks daily in our lives, which need to be managed; insurance can help us manage these risks. This is even more important for the majority of people that are considered to be in the low income bracket. The challenge in Zambia and indeed sub-Sahara Africa is that the majority of insurance beneficiaries are a small segment of the population, as most of the insurance products available on the market are skewed towards people employed in the formal sector. With more than 70% of the adult population in Zambia being employed in the informal sector, there is need to ensure that insurance products that meet the needs of this section of society are made available. Microinsurance can help with ensuring that this informal sector, including the population in the low income bracket, is served.

Insurance is more than just another consumer product; it is a form of protection that should be accessed by everyone in society. Microinsurance provides policies for members of society who may be considered low-income earners but face much the same risks as everybody else, if not more.

Thankfully, this need has now been recognised. In 2009 a multi stakeholder group was formed to spear head the development of Microinsurance in Zambia, dubbed the Technical Advisory Group (TAG) on the development of Microinsurance. This grouping has been at the centre of ensuring an orderly development of microinsurance products in Zambia. The group commemorated its 5th year anniversary in Livingstone at the Zambezi Sun Hotel on the 9th of March 2015. At the event

Mr Titus Kalenga, who has been the Chairman of TAG since its formation, informed the gathering that there have been a number of successes recorded in the microinsurance space in the country. The market has grown, from less than

In recent years, mobile platforms have proved to be an effective tool for the distribution of financial services, and are likely to be used for a wider variety of services in the years to come.Insurance is one of the services that has benefited from this type of distribution channel, which has accounted for the rapid growth in the lives covered under microinsurance. But this still falls short of tapping the full potential of the market. More needs to be done.

This has been the mission of TAG in the last five years, as they have spearheaded a number of initiatives to encourage the local insurance market to provide microinsurance services, and to promote these services to the general public. Recently as part of their mandate they hosted a regional conference in Livingstone under the theme “Microinsurance business models for Africa” , from the 10th to the 12th of March 2015.

The conference attracted over 90 delegates who included the Acting Country Director for the International Labour

MICRO INSURANCE SERVING THE MASSES

100,000 lives covered in 2009 to

lives covered in 2014.


3 million



100,000 lives covered in 2009 to

lives covered in 2014.

Organisation (ILO): Mr Tapera Muzira, Vice-President of Munich Re Foundation: Mr Dirk Reinhard, The Registrar of the Pensions and Insurance Authority: Mr Martin Libinga, Chairperson of the Technical Advisory Group: Mr Titus Kalenga, The President of the Insurers Association of Zambia, Mr Shipango Muteto and other Insurance regulators and practitioners from the region, including development partners. The wide range of participants shows that stakeholders have recognised the importance of Microinsurance in improving the wellbeing of the population and the development of a country as a whole. The conference was officially opened by the former Permanent Secretary for the Ministry of Finance and Economic Development Mr Felix Nkulukusa.

Initiatives for the development of microinsurance require the support of government, since it has both economic and social benefits. The then Permanent secretary in the Ministry of Finance, Mr Nkulukusa, highlighted the importance of Private-Public partnerships. After all, the different sectors should complement each other, each adding value to the initiative in different ways, rather than run parallel programmes. “The growth of the insurance industry will mean less government resources will be needed in the form of disaster management and welfare protection. Calamities such as fire, landslide and floods will not drain national resources once the majority are insured. This makes the insurance industry a key partner in national development. The larger the segment of the population that is insured, the more government resources can be focused on developmental projects”, Mr Nkulukusa said.

Political will and private participation go hand in hand, and consultation is the first step in this process. This opens the door to welcoming more stakeholders to participate in the process.From the perspective of human rights, this initiative will help improve the financial security of those who work in the informal sector. This was emphasised by the ILO Acting Country Director in his opening remarks. “The ILO recognises the role of micro insurance in driving social and economic change through reducing vulnerability among low income households, promoting stronger enterprises and facilitating better public policies.” Mr Muzira added, “Such innovations are particularly important for those in the informal economy who tend to be underserved by mainstream commercial and social insurance schemes. They provide a safety net for households that prevent them from falling into poverty by avoiding the damaging costs of emergencies.” This reveals that providing microinsurance is a human rights concern, aimed at uplifting the dignity of the poorer members of society. This fits in well with the objectives of ILO and other human rights intervention organisations. Mr Muzira explained further, “Having a vibrant and inclusive insurance sector supports the ILO’s broad objectives of promoting social justice and decent work, particularly in creating more and better jobs for women and men on the continent, and protecting people by improving and extending social protection coverage of workers and their families, especially those in the informal economy. Further, a well-functioning and responsive insurance sector can have a positive impact on social justice by moving towards more inclusive financial markets.”




This presents insurance in its true light, not simply as a cost but a form of social protection. We should no longer depend on luck and chance for our wellbeing, or the extended family as a social safety net. The few well to do members of an extended family should not have to bear the toll when there is a family tragedy. Microinsurance is essential.

In light of the economic and social benefits, IAZ has also set a number of benchmarks for the growth of microinsurance in the country. These were pointed out by the Insurers Association of Zambia (IAZ) President, Mr Shipango Muteto, in his opening address. A strategic goal to reach at least 6 million Zambians with microinsurance services has been set. The target can be met by a vigorous and sustained consumer awareness campaign. Marketing insurance is as much about perception as it is about the product. Unlike tangible products, insurance relies heavily on educating the public and creating perception of the services on offer. With such initiatives, we shall see more and more people coming to use insurance services in the days ahead.

Disseminating knowledge on microinsurance will require a different approach, as the low income segment of the population is less likely to be familiar with the technical terms used to explain the nature and benefits of insurance. This will require educational campaigns adapted to suit the understanding of most people, breaking down the contractual jargon into explanations that can be understood and appreciated. The strategy over the next few years is to help the general public understand insurance services and draw them to make full use these products. A number of considerations are vital if we hope to achieve these goals.

Any awareness campaign has to be kept simple. Experts will have to provide concise and simple definitions of key terms, to justify the need for these services, communicating with brevity and clarity, and to provide examples of people who have benefited. They will have to make it clear that they are not selling a superfluous luxury service, but rather a product that meets a very real need.

One challenge that comes with introducing a new service is to convince individuals who have never used insurance that they have a very real need. Another challenge is the mindset. Most low income households live day by day, barely meeting their needs. That is why purchasing a product with long term benefits may not initially appeal to many. This presents a double challenge of educating the masses in financial literacy, explaining the benefits of long term thinking, and uprooting the notion that we should just live for the moment.

There will also be a need to increase the number of strategic partners. Various institutions are adopting a “one-stop-shop” approach to insurance, such as selling insurance where road tax is paid or from Post offices. Banks and mobile phone providers have proven to be good avenues for the sale of insurance cover. Similar strategies may help to promote microinsurance, providing access to the service at selling points for other services or products that are already a part of people’s everyday lives. The association between the insurance service and other established services will help build confidence and cut on overhead costs when existing selling points are used for various products. The challenge is identifying the selling point that will capture the largest number of targeted clients. Mobile service providers will be critical in the distribution of this service.

Public confidence can be built when prominent figures in society associate with the product. It could be civic leaders, traditional leaders, religious leaders or celebrities. The benchmarks are attainable, and the next few years will be exciting for the insurance industry as insurance grows to become a critical part of people’s lives.


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The idea of buying a promise from a person you have never met before and committing monthly premium payments towards that promise, without

even seeing a picture of the building where the other party is based, is an act of faith. The fact that life insurance has achieved so much, even with our limita-tions and shortcomings, is an assurance that the future for the sector is bright.

In 2002 I introduced myself to the indus-try by walking through the door of an insurance company. I found the nicest Executive PA who I informed that I was a fresh graduate in search of a job and willing to work for nothing. She looked shocked and needless to say, the rest is history!

It’s been years now and I am still in an industry that my lecturers at college

proudly declared as the hardest indus-try for any sales person. I remember the words as though it was yesterday. Dur-ing a lesson my lecturer in ’Principles of marketing’ paused for a second with a stern look on his face, and said ‘’Selling goods and services for a living is hard. The hardest of the two is selling services and the hardest service to sell is selling a promise. The hardest promise to sell is an insurance promise and the hardest insurance promise to sell is Life insur-ance and the hardest life insurance to sell is a life funeral policy’’ imagine how shocked I was to find myself selling indi-vidual life funeral policies at my first job. For a long time my pocket money from home was more than my pay and I didn’t have that much pocket money.During the time I sold funeral policies I had the privilege of working with the most dedicated agents in this industry. Agents who helped the company gen-

erate new business by contacting po-tential customers. They had the vision, they believed in the potential for a great success story that every agent shares. The dream is that one day, they will be millionaires! They gave credence to the concept that selling insurance is not for the delicate or faint hearted and that more than any other factor is esseential. Life assurance agents must also have ed-ucation and experience, and must pos-sess a fighting spirit, love the thrill of the hunt, the rush of a sale and see rejection as a stepping stone to eventual success. They all possessed these qualities and were eager to teach me and carry me along during their journey.

I learnt that a career in life insurance is not ideal for introverts, soft spoken or people that are afraid of conflict. I quick-ly picked up the fact that the industry has no formal requirements for becom-

The Promise.By definition insurance is a promise of compensation for potential future loss in exchange for periodic or one off payments.




ing an agent, and that while many companies prefer an educated sales force the general rule is constantly overlooked in favour of the ‘right’ candidate. Sadly I saw how so many were not up to the task. Bit by bit the dream faded away. Before long came desperation, anger, resent-ment and soon followed resignation, fraud and dismissals. That is an everyday story in the life insurance industry, where an estimated 20% of the sales force bring in sales and the remainder are street soldiers who are lucky if they sell one or two policies a month but ultimately will not stay.

Thirteen years down the line I find myself discussing the low insurance penetration rates and what can be done about it and yet the tools that we are using for this purpose are not suited to this role. Most insur-ance agents going round in the market do not inspire much. Granted its not the responsibility of the insurance company to dictate the per-sonal outlook and presentation of their agents but if they are going to represent the company then the company must take some interest in how they look and present themselves. The industry must insure that the salespersons who interact with customers face to face are present-able and reflect the dignity and values of the company. Some of the best agents I worked with could not finish a sentence in English and I wondered how they managed to sell. I realised later that they focused on the customer who was like them avoiding any opportunity to speak English or explain terms and conditions in detail. The downside was premiums were low, so commissions were also low and in turn policy terms and conditions were not fully explained. The customer walked away without a full understanding and would soon either cancel the policy or simply not renew cover.

How can the insurance industry grow when the industry ambassadors who are supposed to generate growth walk, around looking tired, hun-gry, de-motivated, defeated, haggard, desperate and unable to com-municate fully in English? Would you buy a policy from such a sales agent? And yet that is 80% of our sales force in the industry. Senior executives must realise that every agent that walks in the street selling insurance products represents them. What they say, how they say it, where they say it and to whom they speak, will reflect on the company! Every error they make, every customer that is put off by their demeanour is representative of who you are as an executive. You have allowed them to approach the market on your behalf so everything they do they do in your name!

Imagine if we had a different scenario where all the agents that joined the industry hoping to be millionaires from their commissions did be-come millionaires. Imagine if we had an insurance industry that was devoted to seeing its agents succeed, willing to part away with a little more commission, spend more on coaching and training and personal image grooming. Imagine the impact that would have on the industry. Wouldn’t the promise then, be easier to sell.

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BARGAIN OF THE DECADE

ZAMBIAN MOTOR INSURANCE:




I have just returned from a short trip to Europe to see my aged mother and as usual the myriad of reasons why my home is in Zambia, flooded back to me. Yes the variety and sheer number of retail outlets is wonderful and as my wife has her PhD in shopping, she had a wonderful time. The London Parks are still beautiful, public transport actually runs on time and the whole sense of being back in an organized environment is interesting. But there are many reasons why Europe cannot match Zambia in many ways, and Insurance, specifically Motor Insurance, is certainly one of them.

My young nephew is a professional footballer at a London club. He knows the manager of the Alfa Romeo franchise in North London who kindly let me test drive a classic Alfa sports car called a Spyder that he was trying to sell. This is a tiny two-seater speed machine that is allegedly a veritable magnet for attracting gorgeous young ladies but which will cause the driver to rapidly mount up speeding fines whilst enjoying a few exhilarating moments of acceleration and breaking between London traffic jams. The price for this particular 5 year old yellow dream machine was a mere $25,000 and yes the manager expected to sell it quickly due to the un-seasonally wonderful London sunshine. However, he did have a major barrier to explain to prospective customers and that was the cost of motor insurance which he illustrated using myself and my nephew as examples leaving me completely astonished at the Motor vehicle insurance scenario in central London.

Apparently an Alfa Romeo Spyder has an insurance rating that is so high that it loads the vehicle with the equivalent of 25% of the vehicle’s actual value just to get comprehensive insurance cover and this is assuming that you are a middle aged, office bound, experienced driver. However, for my Nephew, an 18 year old professional footballer the rate literally doubled. Just to put this in context, converting into Kwacha the cost of the Alfa was K175,000 and the insurance for myself would be a mere K43,750 per annum whilst my nephew would need K87,500 to get insured. Absolutely horrific!

Here in Zambia I do not absolutely know what the Insurance rate would be for an Alfa Romeo Spyder but I can assure readers that it would a great deal less than in London, probably at least half the price. There are many superb licensed General Insurance Companies and all of the licensed Insurance Brokers will shop around for their customers to get the very best deal for them. Zambia has an extremely customer based pricing philosophy for Motor Insurance and whilst driving conditions in London may be just a tad different compared to those in Lusaka, thank goodness for the difference! Just imagine owning that Alfa Spyder and then driving in spurts of 100 meters between traffic lights knowing that you were paying an Insurance Company a massive great chunk of your hard earned pounds just to be insured, noting that in London, if you are caught with no valid Insurance you may as well throw away the keys to your car….Motor Insurance in Zambia, definitely the bargain of the decade and yet another reason why my home is here and not in Europe!

By Gary Corbit




One of the roles of the Pensions and Insurance Authority (PIA) is to deal with complaints from insurance clients. The complaints we receive range from unauthorized deductions to nonpayment and delayed payments of claims. The PIA assists in resolving most of these complaints and those who have sought our assistance can attest. Unfortunately, sometimes we are unable to assist because we discover that the insured person did not understand the policy and this leads to frustration. Most of us buy policies and we sometimes choose not to read the agreement and therefore do not understand what is covered, the exclusions that take away coverage, and the conditions that we must meet in order for the coverage to apply when a loss occurs.

A few weeks ago, a caller on our ZNBC Radio 2 programme entitled “Improving Financial Education And Awareness On Insurance And Pensions” called in and complained about how he had been under paid by an insurance company. Upon further inquiry it was discovered that he had bought a policy which was supposed to mature after 5 years but mid way he decided to cash in. Unfortunately, what he was given was not what he anticipated and he felt cheated. But had he read the

policy before buying, he would have understood that you can only get the full benefits of a policy if it matures. Terminating a contract has its own consequences and these are usually included in the policy contract.

In our consumer education programmes we not only raise awareness on the benefits of insurance but also place emphasis on the need to read an insurance policy, including the terms and conditions. The reason we do this is because understanding your policy before buying it can help you avoid problems and disagreements with your insurance company in the event of a loss. An insurance policy is a legal contract between the insurance company and the person or business being insured. If you find the policy difficult to understand, do not hesitate to ask your insurer or broker and they should be able to assist you.

Reading and understanding your policy helps you verify that the policy does actually meet your needs and that you understand your and the insurance company’s responsibilities if a loss occurs. It helps you to also determine if it is something that you can afford.

Avoid Frustrations…Read your Insurance Policy




Below are some of the basic things that we need to understand in a policy contract:

DeclarationThis is usually the first part of an insurance policy. It identifies who is an insured, what risks or properties are covered, the policy limits, and the policy period. In the case of motor insurance, this section will include the description of the vehicle covered (make/model, VIN number), the name of the person covered, the premium amount, the sum insured, etc.

DefinitionsMost policies have a definitions section which defines specific terms used in the policy. Do not take it for granted that all words always mean the same thing, for instance the term dependent may be linked to age, employment status, etc.

ExclusionsExclusions mean the conditions or services excluded (taken away) from the policy cover. An example of an excluded

loss under a motor policy is damage due to wear and tear. Under a medical policy you may find exclusions on selective or planned surgery say within the first three months following commencement of the policy. Other exclusions could include attempted suicide, cosmetic/plastic surgery, or treatments for infertility. Injuries caused by alcohol or drugs may also be excluded.

Conditions Terms and conditions are provisions found in the policy that qualify or place limitations on the insurer’s promise to pay or perform. If the policy conditions are not met, the insurer can deny the claim. Common conditions in a policy include the requirement to file a proof of loss with the company, to protect the property after a loss, and to cooperate during the insurance company’s investigation. Some people choose not to cooperate and the insurance company may delay or even fail to honour the claim and when this happens, it leads to frustrations and even anger. This can be avoided if you read and understand the policy before buying it as you would be fully aware of the terms and conditions tied to the policy.

To ensure that you are on the safe side, make sure you get a copy of your insurance policy through your agent, broker or directly from the insurance company.

By Doreen Kambanganji



One of the most frequently asked questions in my years of insurance broking is: Why should I place my insurances through an insurance broker at an additional charge when I can place insurance direct to the insurance firms without incurring broker/agent fees? The question I often pose in return to open up the discussion is: Why should I hire a Lawyer/Advocate to represent me in Court when I can represent myself in the Court? Simply put advocates have studied and mastered the various Laws to present and argue a case convincingly to ensure the freedom of their clients if indeed they are innocent or alternatively lessen the charges based on the facts to be presented.

Insurance brokers are experts on insurance matters who know the best products offered for different types of businesses, the best market rates charged for different types of risks, notwithstanding that they also know which insurer is best for which risk based on their market experience.

It is important to point out that the Zambian market currently has 21 registered short term insurers and 12 Life insurers. The various companies have been in existence for different time periods, at different capital levels, offering different reinsurance programmes, with different management experience and skills, and more importantly different claims turnaround periods. The insurance broker has information on all these various matters

at their finger-tips whilst the client may make a decision based on inadequate information which may hurt their business interests. The notion that placing business through an insurance broker is expensive can arguably be deemed a misconception. It is vital to note that insurance broker or agents’ fees/commission is paid by the insurance company and not the client. Insurers pay insurance brokers’ and agents’ fees for placing business with them. Whilst one may argue that the payment is from the client premium in principle the payment is from the insurer and not the client. It is the insurer who pays the Broker from the premium in recognition of the effort made to attract the customer and also taking time to fully comprehend the client’s request which they in turn demand adequate coverage for.

Insurance Brokers are not tied to one insurance company meaning they are free to scan the entire insurance market in search of the most favorable insurance terms. This affords the client an opportunity to make an informed choice as opposed to restricting themselves to one insurance company. This is in contradiction to the misconception of increased cost as costs are actually reduced.

It is important to point out that insurance companies often do not have capacity to retain or absorb all the risk presented to them especially industrial and mining risks, hence the need

WHY USE INSURANCE INTERMEDIARIES?



for reinsurance. Reinsurance is the process whereby insurance companies also seek insurance. In other words reinsurers insure the insurers. The quality of reinsurers on the risks placed is vital. In the event that reinsurers with inadequate capacity are used, huge losses may not be paid fairly and on time. The insurance broker’s role is also to check the quality of reinsurance arranged and in some instances facilitate reinsurance placement locally and abroad. International broking firms have easy access to the large international Reinsurers, hence making quality reinsurance placements for clients easier and faster.

Insurance is a technical field that often entails detailed policy wording whose interpretation may be misconstrued resulting in a legitimate claim being repudiated. It is the task of the insurance broker and other intermediaries alike to argue on behalf of the client to ensure fair and timely settlement of claims. It is also common to have borderline cases meaning claims that can either be repudiated or settled as there is enough basis for both arguments, hence the duty of the broker to ensure that the insurer is motivated to pay. Brokers always emphasize that a good insurer is one who always finds a reason to pay a claim as opposed to the reverse.

On the other hand it is possible that some claims from the clients are not payable at all. The insurance broker may negotiate ex-gratia payments from insurers. Ex-gratia payments are payments

made out of grace. Various factors are often considered by insurers in making the decision such as how long the client has had a relationship with the insurer, the frequency of earlier claims, premium payment and so on.Letting insurance brokers handle insurance matters enables clients to concentrate on their core business, saving time and enhancing productivity.

In conclusion insurance brokers and agents are important to both large corporations and individuals and I hope you will be encouraged to engage intermediaries and assess the difference.

By George Marekera




One of the first things any scholar or insurance practitioner is told is that insurance contracts require the insured to have insurable interest in the subject matter. It is further stated that lack of insurable interest renders the contract of insurance unenforceable or void ab initio. This means the risk purportedly assumed under the contract of insurance is never run by the insurer if it turns out that the insured lacks insurable interest. However in recent years the insurable interest requirement has been seriously questioned both in terms of its nature and relevance. Critics argue that this requirement was imported wholesale into the legal systems of many countries from England and is now out of step with the dictates of modern commercial relationships.

Insurable interest originated in England where it was first introduced in marine insurance by the Marine Insurance Act of 1745. It was later extended to life insurance by the Life Assurance (Gambling) Act of 1774. The Gambling Act of 1774 specifically targeted life insurance because gambling by people on the lives of others through insurance had become a serious social problem at the time. In several cases there were suspicious deaths of people whose lives were insured by strangers. To curb the practice of gambling disguised as insurance the Gambling Act was passed which introduced the insurable interest requirement in life insurance contracts. Basically this meant that no person could insure the life of another unless they could demonstrate some legally recognized financial interest in the life of the person they proposed to insure. The same requirement was subsequently extended to non-life insurance.

Despite its legislative origins, the insurable interest requirement was adopted by many countries historically or colonially linked to England such as Australia, New Zealand, South Africa, Zambia

and Zimbabwe to name but a few. In most cases the requirement was adopted wholesale with no attempt being made to adapt it to the local context. Since then insurable interest has been an integral part of insurance law in these countries. Its absence has been raised in many cases as a basis to deny payment of indemnity to the insured. However in recent years the relevance of insurable interest to the validity of insurance contracts has been seriously questioned in a number of jurisdictions. What has particularly irked the courts for example is the idea that insurers appear not to do enough to ascertain the existence of insurable interest when the contract of insurance is entered into but are quick to rely on its absence when a claim is reported. As a consequence some countries have taken the bold step of actually enacting legislation to address the issue of insurable interest. In other countries courts have been at the forefront in restricting the scope of insurable interest and refusing to allow its absence to be used as a purely technical defence.

Australia and New Zealand have both used legislation to delimit insurable interest. Before the enactment of the Australian Insurance Contracts Act of 1984 the Law Reform Commission in that country had recommended that insurable interest be retained as a requirement in life insurance but be scrapped in non-life or indemnity insurance. This recommendation was subsequently incorporated into law. One of the reasons cited by the commission in support of its recommendation to remove insurable interest as a requirement for the validity of non-life insurance policies was that there is nothing more that

IS INSURABLE INTEREST AN ENDANGERED SPECIES IN INSURANCE CONTRACTS?

By Albert Mushai*




insurable interest adds to insurance which the broader principle of indemnity cannot do. Often it is said that insurable interest is required to prevent people from recovering when in actual fact they have not suffered any loss. However the principle of indemnity is meant to do exactly the same thing. Under the principle of indemnity an insured cannot be indemnified if they have suffered no loss. Furthermore, it is the duty of the insured to prove their loss before they can be indemnified. The relevance of insurable interest therefore becomes questionable when its necessity is justified on the basis of what the fundamental principle of indemnity is meant to do. Interestingly in New Zealand the approach taken on insurable interest is the opposite of that seen in Australia. New Zealand passed the Law Reform Act in 1985 in terms of which it abolished the requirement of insurable interest in life insurance.

A series of cases in South Africa on insurable interest suggest that courts are increasingly becoming uncomfortable with the principle being used to nullify an otherwise valid contract. The most recent of these cases is Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company of South Africa Ltd (2013) in which the court fell just short of rejecting the need for insurable interest in insurance contracts altogether. The judge indicated that insurable interest should not be viewed as a stand-alone requirement. Instead it should only come into play if it becomes necessary to inquire whether the contract in question amounts to legitimate insurance or gambling. If it is clear that there is neither fraud nor gambling the contract should be enforceable and the question of insurable interest should not even be considered. In addition, the judge stated that it should be the duty of insurers to tell the buyer of insurance upfront if they think that the proposed policy may not be enforceable because it lacks insurable interest instead of selling the policy and then seek to raise lack of insurable interest as a defence when a claim

is reported. In other words courts are less likely to uphold use of insurable interest as a technical defence where the contract in question does not amount to a wager or gambling.In the United Kingdom insurable interest has also been receiving attention through the courts. UK developments in this area are of particular interest because that is where insurable interest originated. In the recent case of Western Trading Ltd v Great Lakes Reinsurance (UK) Ltd (2015) EWHC 103 (QB) it was held that the defence of lack of insurable interest is unlikely to succeed in cases where no element of fraud exists. The court further held that lack of insurable interest is purely a technical defence and courts are unlikely to rule that no contract of insurance exists purely because of insurable interest where the insurer has been in receipt of premiums. In particular the judge was critical of the conduct by the insurer of not canvassing the issue of insurable interest at the time the proposal form was completed only to raise it when a claim was reported. Accordingly the judge ruled that in the absence of proof of fraud on the part of the insured a contract of insurance cannot be invalidated purely on the basis of lack of insurable interest if indeed a loss has been suffered by the insured.

From the above discussion it is apparent that insurable interest is under closer scrutiny in major jurisdictions worldwide. It is suggested that Zambia is not an exception. If the issue has not yet arisen it is only a question of time before it does. Insurers therefore need to be aware that the days of simply raising the argument of lack of insurable interest appear to be over. There appears to be a convergence of consensus around the proposition that insurable interest should only be relied upon either to prove the existence of fraud or to prove that the transaction in question is not insurance but a wager or gambling instead. Outside of this it is becoming increasingly difficult to rely on lack of insurable interest to invalidate an otherwise legitimate insurance contract.

*Lecturer in Insurance and Risk Management, School of Economic and Business Sciences, University of the Witwatersrand, Johannesburg, South Africa.




First, you need to follow the right procedure regarding the law and police requirements. If your vehicle has been involved in a shunt (i.e. a bumper to bumper collision on the road), you need to stop, put warning triangles so that other motorist do not collide, and inform the police. The police report is essential if you are to make a successful insurance claim. The police will visit the scene and determine who is in the wrong and who is the victim. Their conclusion will be stated later in the police report. This is important, especially if you are the victim and you hope to claim on the other person’s policy.

4 steps to lodging a successful motor insurance claim

Imagine it’s an ordinary day; you are driving down the road, minding your own business. Then suddenly you see a car moving at high speed behind you, and the truck in front has stopped at the junction. Before you can react, you hear the loud bang as the driver (with no brakes) hammers into your rear bumper. Insurance deals with such cases on a daily basis.No one wants to experience a misfortune like a road traffic accident. But this does not mean that we should not prepare for it. Insurance provides a way to transfer a risk to the Insurance Company, so that costs of replacement or repair will be covered in the event of an accident. But don’t stop there. You need to be familiar with the limits and conditions of insurance cover, and how you can benefit if ever you have the misfortune of being involved in an accident. What are the steps you need to take? What is your responsibility and what is the responsibility of the insurance company?

1

The vehicle will then be moved to a safe location. Depending on its state, it may be driven (if it is something minor like a small dent) or it may need to be towed. Depending on the type of insurance policy, it may or may not include a refund of towing charges.

Note that insurance cover will only apply if you are a licensed driver. If your license has expired, there may be a penalty, but most insurers would still process the claim. Also keep in mind, your car must be insured, even if you are claiming on the other person’s policy. Otherwise you will still be considered to be on the road illegally. Either lack of a license or lack of valid insurance cover can be used to disqualify you from insurance compensation.



The insurance company will provide a claim form. Complete this form with all the required details, and attach copies of required documents. These documents include a photocopy of the driver’s license, repair quotations and police report. Feel free to ask your insurance provider to clarify what you may not understand. Remember, your insurance provider is providing a service that you pay for. They are trained and appointed to make sure you get the service you require. Be sure you have fully understood what is required of you and how to complete the form. If you are claiming on someone else’s policy (e.g. the one who hit into your vehicle), then the offender will also have to fill in a form.

The insurers will also arrange for someone to inspect the vehicle. Do not tamper with the vehicle in any way before the insurers have inspected the vehicle, otherwise that may also hinder your chances of making a successful claim. Many insurers photograph the damaged parts of the vehicle to confirm the extent of damage and for their records. The inspection also helps confirm the cost of repairs.

It is important that you go to approved garages to obtain three repair quotations. The insurer will then proceed to renegotiate with the garages before they confirm which garage can do the repairs. After the approval, the selected garage will handle the repairs and indicate when they expect to complete the job.

The advantage of using an approved garage is, in case you are not satisfied with the job, the insurer will be able to speak to the garage on your behalf. The approved garages are normally sensitive to the complaints from insurers who can remove them from the approved list if they do not perform according to expectations. If you follow this outline, you will avoid many unnecessary challenges when trying to lodge your motor claim. Above all, let’s continue encouraging safe driving habits on the road, and drive roadworthy vehicles.

2 The next step is to inform the insurance company. The incident must be reported before two weeks have elapsed. This time limit is normally included in the insurance contracts. Even if the police report is not yet out, go ahead and inform the insurance company. Complications will arise if you try and claim long after the incident, your claim will most likely be rejected.

3

4

By Kambole Chituwo



Microinsurance is a growing phenomenon in Zambia and Africa at large. Different financial institutions are getting involved and show great interest in venturing into Microinsurance; one wonders why it is so. Does microinsurance work for both the consumers and the suppliers? Is this question a matter of opinion or it’s backed by facts?

What is Microinsurance?

I can define microinsurance as insurance for the low income segment of the popula-tion. These are people who are predominantly in the informal sector and some in the formal sector. I know someone who says that the entire Zambian insurance market is a Microinsurance market considering the economics of Zambia. This may be true.

Microinsurance is regarded by some as a risk management mechanism that the poor can use to compensate for the lack of appropriate state-sponsored social protection programmes. Alternatively, it is viewed by suppliers, as an opportunity to provide fi-nancial services to the low-income market at a profit. Regardless of where the empha-sis is placed, all microinsurance programmes should aim to become viable and ensure a win-win situation for all parties involved since donor or government or employer subsidies are either only temporary, not sufficient or not available.

Microinsurance is occasionally considered a social corporate responsibility undertak-ing. This is because of the nature of the Microinsurance benefits and the target popu-lation who receive these benefits. Take for instance life and funeral Microinsurance products. These polices offer assistance at an unexpected time of need.

But like many other things that are normally provided for free or as help from the government or the employer, it is sometimes abused and taken for granted. Most families and communities operate in the same way. People take it for granted that some family members will take care of them in the time of need. The family is their insurance i.e. help in time of need. These people do not want to plan ahead and take care of the unpredictable future and the future of their families and those who rely on them them as a financial safety net.

FACETS OF MICROINSURANCE




So who should buy Microinsurance?

Considering that Zambia is a Microinsurance market, everyone should be interested in purchasing Microinsurance. If you are employed and have some kind of employee benefits from the employer, have you ever thought of what happens after you leave employment or when you are between jobs? And what happens to those family members that look up to us for assis-tance at times of need who may not be able to have insurance cover on their own, people like our grandparents and aunties, uncles, nephews and orphans, including our house helpers and garden care takers, even In-laws? Now this is where most are in desperate need. I feel it is a responsibility of all of us to help when we can. Hence we should all play a part in creating a better world. We should do what we can like sponsoring an orphan to school or buying them a Microinsurance policy. How much will this cost us? An amount equal to 1 days lunch, a bot-tle of beer, a day worth of airtime!

How are the Zambian people going to benefit from Microinsurance?

How does the government participate in providing a social safetynet? Through social welfare, cash transfer programmes or health insurance.

From the supplier side, providing and selling Microinsurance can be challenging. This is so because it is well known that Mi-croinsurance targets the bottom of the pyramid segment of the population - These are people with low incomes. So how do you reach out to them to sell them a promise of a pay-out in event of some unexpected unpleasant thing happening? Fur-thermore, the majority of these people have never heard of the term insurance, or how it works.

Then after explaining, the insurer will ask them to purchase a policy, to pay renewal premiums in order to keep their policies active and payable in the event of a claim. These people have other pressing needs competing for the same sum of money. On the flip side, in the event of a calamity, the Microinsurance target market normally tend to rely on other people’s mercy for help, and this help is not guaranteed. Seeing where our society is heading with regards to the “Ubuntu” ideology (which is ba-sically humanism, “I am because you are”, togetherness of the extended family setup, etc), it is only a matter of time before such help will completely fade away. Other informal methods of coping with risk are through assistance from the church, but we know that some churches are registered as businesses and a business according to economics is a venture which should generate income, so one would ask how many such churches will give out to the poor in times of need. With this in mind the last resort is borrowing “kaloba” which leaves people far worse off than they were before.

In conclusion, a well-known fact amongst insurers that the traditional insurance market is getting saturated and there is need to expand the market to the informal sector in order to survive the competition. In a couple of years I foresee a situ-ation where Microinsurance shall be the life blood of the in-surance industry hence only companies prepared for this shall remain established in the market.


By Botha Kamphata



(2009)

Innovation is our hallmarkInsure with Phoenix Of Zambia Assurance

[email protected]+260211233956/ +260211235394



(2009)

Innovation is our hallmarkInsure with Phoenix Of Zambia Assurance

[email protected]+260211233956/ +260211235394

Introduction

In September 2014, the Securities and Exchange Commission of Zam-bia (SEC) approved an application by Credit Rating Agency Limited (CRA) to operate as a credit rating agency in Zambia. CRA became the first rating agency to be granted a license in the Zambian financial market. CRA has the mandate to rate any registered entity, including listed companies, financial institutions, Small and Medium-sized En-terprises (SMEs), municipalities, government agencies, projects; and debt instruments issued by registered entities. CRA has international accreditation, being a member of the European Association of Credit Rating Agencies (EACRA), and its ratings are internationally recog-nized.This article presents the concept of credit ratings and examines the relevance and potential benefits to the Zambian economy, including the insurance industry.

What are credit ratings?

A credit rating is an independent opinion by a rating agency about the credit worthiness of an entity. It applies a methodological-based ap-proach to quantify and rate the credit risk of an entity. This essentially measures the probability of default of the entity on a contracted debt. The rating scale typically runs from AAA to C-. Thus an entity rated AAA has a minimal probability of default, while one rated C- has a very substantial probability to default.

The methodology used to arrive at credit ratings is based on risk as-sessments of both the financial standing and business profiles of an entity. The methodology is very elaborate and culminates in assigning scores to various financial and business attributes which are aggre-

gated into a rating score. For instance, an entity with a strong financial standing and with a dominant market position in a stable industry will have a high rating. Conversely, an entity with a weak financial stand-ing and market share in a volatile or declining industry will have a low rating. In between ratings would, accordingly, be assigned to different permutations of financial standing and business risks. The author will present the broad methodology in a subsequent article to be pub-lished.

What are the benefits of credit ratings?

Credit ratings facilitate credit. Before we examine the specific benefits of credit ratings, we shall quickly recap the benefits of credit in the broader economy. Perhaps a 19th century quote from Daniel Webster in the US Senate in Washington DC, March 1834 aptly drives home the essence:

“Credit is Man’s Confidence in Man.”

Commercial credit is the creation of modern times and belongs in its highest perfection only to the most enlightened and best governed nations. Credit is the vital air of the system of modern commerce. It has done a thousand times more to enrich nations than all the mines of the world.”

It follows logically that credit ratings improve the effectiveness and efficiency of credit. The benefits accrue to (i) providers of credit,(ii) re-ceivers of credit and (iii) third parties. We shall examine each in detail.

(i) Benefits to Providers of Credit

These include investors, lenders, depositors and other financiers. A credit rating quantifies credit risk. Providers of credit are therefore better informed about the appropriate pricing level and the quantum of funds they are prepared to advance. This enhances investor confi-dence and protection. All in all, ratings raise market efficiency in re-source allocation and pricing.

The Advent of Corporate Credit Ratings in the Zambian Financial MarketArticle by: Chishimba Yumbe. Executive Director – Strategy and Business Development at Credit Rating Agency Limited.



(ii) Benefits to Receivers of Credit

Conversely, receivers of credit benefit from the clarity on credit risk the rating brings about, and can therefore borrow at a commensurate lower price than in the absence of a rating. The clarity brought about by ratings also improves access to finance by borrowers.

(iii) Benefits to/from Third Parties

Receivers of credit or rated entities do not just benefit from Investor/lendor /depositor relations. Mutual benefits from other relationships are also manifest:

(a) Suppliers:

Suppliers and contractors to a rated entity will be more confident of settlement of outstanding dues. The rated entity may accordingly en-joy better credit terms with the suppliers and contractors.

(b) Customers:

The impact on customers is twofold: First, is that the reduced cost of financing (as mentioned in item (ii) above) can enable the rated entity pass on the benefit to its customers through lower pricing, and there-fore increase its market competitiveness. Second, is that customers may voluntarily opt to deal with a strong rated company because they believe that (i) the company has the capacity to perform and deliver (especially for huge or long term projects) and (ii) they can get better credit terms. Either way, a good rating is likely to increase the volume of business with customers. For an insurance company, customers can be contextualized as policy holders who may opt to deal with a well rated insurance company because it has competitive premiums and they believe it has the capacity to settle their claims efficiently.

(c) Regulators:

Regulators derive direct benefit from a rating in that they are able to rely on it as an independent assessment of the institution. This not only assists in reducing regulatory oversight time and resources, but also enhances the relationship between the institution and regulator. For financial institutions, guidance for regulators is specifically pro-vided for under frameworks such as Basel II. In Zambia the regulators of the financial system are the Bank of Zambia, the Securities and Ex-change Commission, and the Pensions and Insurance Authority.

(d) Government and Government Departments:

Governments find credit ratings very useful in their assessment of the capacity of contractors to perform, meaning that projects would not be awarded to contractors with a high credit risk profile without tak-ing adequate mitigation of the risk.

How will credit ratings add value to the Zambian economy?

As mentioned, CRA became the first rating agency to set up opera-tions in Zambia in September 2014. CRA also happens to be the fourth rating agency to open in Africa, with others in South Africa, Nigeria and Senegal.

Zambia has vast potential for development but investment flows both foreign and domestic have been hindered by obscure information

on investment prospects. Prominent is inadequate information on the credit risk of potential borrowers or investees. A much as positive developments in the Zambian economy have been recorded thus far, including consistent GDP growth of over 5% for the last several years, all this has happened without corporate ratings. Potential investors, lenders and other financiers have not advanced as much funds as they potentially would have.

In Zambia, all listed companies on the Lusaka Stock Exchange are not rated and neither are all the 19 commercial banks operating in Zambia. For the insurance industry, only about three members of the Insurers Association of Zambia have been rated before. In most de-veloped states, a corporate rating is a prerequisite for listing on the stock exchange or issuing a corporate bond. Banks and Insurance Companies too are typically rated by regulatory decree or default mar-ket practice. The regulators have long identified this as an essential element to guide investors on risk, pricing and quantum. For instance, on the Johannesburg Stock exchange any bond listing has to be pre-ceded by an independent rating . Closer to home, the Reserve Bank of Zimbabwe issued mandatory annual rating guidelines for commercial banks in 2004.

The rational proposition is that if the Zambian economy is to grow further significantly, it cannot be done through business-as-usual. New innovations are clearly needed. Rating services are a tested phe-nomenon and their contribution to developed economies are plain to see. CRA hopes to spur investment flows in Zambia through increased investor confidence and protection through corporate ratings. As stated, ratings serve to designate credit risk appropriately, and this fa-cilitates efficient pricing and allocation of capital resources. CRA there-fore expects to greatly contribute to the Zambian financial market by bringing about more accurate pricing and more equitable allocation of resources. These efficiencies in pricing and allocation of capital in turn will provide maximum leverage to the Zambian economy based on what is available or, rather, will maximize value- for-money.The last section has articulated all potential beneficiaries of ratings - providers of funds, receivers of funds and third parties. Zambia is no exception and all potential beneficiaries are likely to benefit from rat-ings in the fullness of time.

The Zambian Government has already shown leadership by obtaining sovereign ratings in 2010 from the big three rating agencies - Stand-ard and Poors and Fitch (solicited ratings), and Moodys (unsolicited rating) . This rating enabled the Government successfully issue sover-eign bonds on the international market in 2012 and 2014 to finance major infrastructure projects. Ordinarily, the private sector should have moved faster than Government, but this has not been the case with ratings. It is however not too late, or as the adage goes, better late than never. The advent of ratings in the Zambian financial market by CRA is poised to bring about immense benefits to an array of stake-holder and spur economic growth significantly.

More Information on CRAMore information on CRA is available on its corporate website www.creditratingagency.net



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MICROINSURANCE AND MOBILE NETWORK PLATFORMSThe author, Mr Chishiba Kabungo, is an Inspector in the Insurance Department at the Pensions and Insurance Authority.




Microinsurance has burst onto the Zambian insurance scene at the right time. This groundbreaking product will meet the needs of most Zambians. Its hallmark features such as its social benefits, low premium and low coverage limits makes microinsurance ideal and affordable for the majority of Zambians in the medium and low income brackets. And according to the International Labour Organisation (ILO), microinsurance has changed the global insurance picture and provides coverage to over 500 million people worldwide. The use of mobile service providers as distributors of some of these products has also enabled people even in remote areas to have access to insurance at an affordable rate.

Microinsurance has the potential to help low-income households mitigate their vulnerability to unforseen disasters. Insurers, however, face a number of challenges when delivering microinsurance products, such as high transaction costs, poor infrastructure, low uptake and lack of awareness. Further, the cost of distributing, underwriting and administering claims does not decrease in proportion to the premium received and sum assured. According to a study by International Labour Organisation (ILO) entitled Microinsurance Facility Initiative (Prashad et. el .Paper No. 26: 2013), insurers can leverage mobile phone platforms to enhance efficiency across the microinsurance value chain by lowering costs, reducing turnaround times and bridging geographic distances.

Insurers could utilize strategic partnerships with Mobile Network Operators to allow them access data on consumer spending patterns which could be used to design and adjust existing products to make them more responsive. Microinsurance product pricing has been identified as one of the key elements in achieving sustainability and scale. According to a study presented at the 9th Microinsurance conference in Jakarta, actuarially determined prices in microinsurance render products unsustainable and costly (Sachi et el. 2013). Data from Mobile Network Operators could provide an opportunity for insurers to adjust prices in real time and help to reduce transaction costs.

Mobile phone platforms provide immense insurance coverage potential to insurers in Zambia. It is estimated that over

compared with less than 5% who are insured. The picture is not different from the entire continent of Africa were 44.4 million are covered by insurance compared with over 600 million mobile phone subscribers (Prashad et. el ILO 2013). It is therefore encumbunt on insurers to understand and appreciate how they can leverage mobile platforms to access this

immense market to achieve scale and profitability.Insurers could take advantage of the wide distribution network of mobile providers to enhance their brand value and improve operational efficiency. Improved operational efficiency will reduce costs and make microinsurance products affordable.

Examples of strategic Partnerships

The kilimo Salama project in Kenya is a partnership between the Insurer UAP and the Syngenta Foundation. Farmers purchase agriculture insurance and farming inputs using Safaricom M-Pesa Mobile money service. The Kilimo Salama project drives efficiency by omitting all paperwork hence reducing costs (ILO 2013).

In Zambia, we have a number of products that have been introduced and these include the Airtel Life Insurance product in partnership with African Life and Micro Ensure, the MTN Edusure (an education policy) in partnership with Hollard Life Insurance and MTN Life After Life (funeral policy) with African Life Assurance. According to the ILO study, from a mobile network provider perspective, adding insurance to its portfolio of products serves multiple purposes. First, insurance has the potential to provide another revenue stream, received either as a commission or through profit-sharing. While this added revenue is attractive, perhaps a greater incentive to offer insurance as a value-added service is its potential to help mobile providers differentiate themselves from competitors and attract and retain clients, as well as increase the average revenue per user by encouraging clients to spend more by using more airtime in order to retain their insurance (Prashad et el ILO 2013).

Insurers are using mobile phone platforms to make enrolment and claims processes more efficient, provide better customer care and improve communication with policy holders. For developing markets like Zambia, loyalty-based products have the potential to succeed, but as insurance appreciation grows more voluntary competitive products could be launched.

From a regulatory and government perspective, insurers partnering with mobile platforms provide an opportunity to advance the financial inclusion policy and insurance market penetration. Insurers should therefore seize the opportunities offered by mobile platforms to enhance service delivery, competitiveness and profitability.55%

of Zambians (over 8 million)have access to mobile networks




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HOMEINSURANCE

Unlike motor insurance, home insurance is not man-datory but the risk in not having this insurance cover is plain for everyone to see. Yet, we choose not to insure our homes even though realistically speaking, more money is invested in a house than a car.

Insurance is the only financial service that takes care of us in our misfortunes. It is the only financial service which is able to return you to your original state and this comes at a very low cost. Just last week, a named group of women on social media were discussing the importance of home insurance and a day after that I heard about a house which was gutted by fire in Kabwe. From what I have heard, the house was the major source of income for the owner and one may wonder what will now happen. This case is not unique as we have all witnessed or learnt through the media about such misfortunes.

Home insurance cover basically protects us from financial loss when misfortunes like fire and theft hit us. Unfortunately most of us in Zambia still think that insurance is a luxury and some even go to the extent of avoiding motor insurance even when it is a statutory requirement. If you want to understand the necessity of insurance, just ask someone who has suffered a loss and had no cover.

In terms of premium cost, home insurance is very low. Infact it is even lower than motor insurance and this is because the likelihood of the risk occurring is lower. The premium you will pay is very low and is calculat-ed at 0.125% of the property value + 16% VAT. So let us assume your house is valued at K650, 000.00, your premiums will be about K942.50 (K812.50+130.00, VAT) per annum. This is a very small amount to part with compared to what you would lose if you lost your house. Even for a rich person, it only makes economical sense to pay this premium instead of reinvesting huge sums of money in rebuilding.

A home insurance policy can also be extended to cover theft. Imagine a situation where thieves break into your house and take all your valuable posses-sions like electronics and furniture. With the kind of economic situation that is prevailing today replac-ing these items may be a tall order for most people, considering that you have other bills to pay. But when you have a home insurance policy that includes theft cover, in the event of a robbery, the insurance com-pany is mandated to compensate for the loss. You might not go back to exactly the same level where you were before the theft but the compensation that you get ensures that you continue to enjoy the kind of lifestyle that you had and this is one key feature of

A NECESSITY




insurance. For the person who had not taken up home insurance cover, such a theft will leave a huge financial dent. It will be difficult for him to furnish the house again and quickly return to enjoying the same kind of lifestyle the fam-ily was used to before the burglary occurred. And in the worst case scenario one may even be forced to borrow in order to maintain this kind of lifestyle or drop the standards altogether. Home insurance gives us peace of mind because we know our lifestyle will not be interrupted for long.

Misfortunes can strike anyone at any time. No one plans for such and that is why they are called misfortunes. But we must be financial smart and insure so that we protect ourselves. It is advisable that when these misfortunes occur we should be on the right side, under the insurance cover which will protect us from financial disaster. When you are living in a house which is insured, you can be confident that in case of any eventuality your financial status will not be affected.

However, you need to know that there are certain things that your home policy will not cover and you need to know about these before you buy the policy. Do not forget to read the terms and conditions to avoid disappoint-ment in future.

And remember to shop around and get the right policy. Consult an insurance company or broker for more information.

By Doreen Kambanganji

“ Do not forget to read the terms and conditions “




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Lusaka Head Office: Premium House, PO Box 30894 Lusaka.Tel: +260 211 229343/57 Fax: +260 211 222263Email:[email protected], Web:www.zsic.co.zm

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Zambian Insurance Journal | 47Lusaka Head Office: Premium House, PO Box 30894 Lusaka.Tel: +260 211 229343/57 Fax: +260 211 222263Email:[email protected], Web:www.zsic.co.zm

Personal Insurance

Secure Your...Home and Personal property

We know and understand that your home and family are precious to you...

Call us today for: Home Insurance: Loss or damage to your house & contents due to among other things theft, fire, flooding and storms.

Personal Accident Insurance: Insurance cover in the event of death, dissability or injury. Travel Insurance

The actuarial profession has been ranked the top job in the US out of 200 roles ranked by online recruitment site CareerCast.com.

BY CINTIA CHEONG

The skills set of actuaries can be used in a variety of industries such as insurance and pensions, making it a “passport to a global career”.

The best job rating for 2015 evaluated factors such as income, work environment, stress and hiring outlook. It reported the average income of an actuary was $94,209.

Tonya Manning, chief actuary at Buck Consultants of Xerox, told CareerCast.com: “I’ve never met an actuary who said they didn’t love what they do. I work with interesting people every day, from CFOs and attorneys to international clients, and what I do each day is different from what I did the day before.

“And since I love solving problems that benefit society, it’s really a wonderful career.”Other jobs requiring mathematical skills were ranked highly, with mathematician taking third spot and statistician in fourth place.

Careercast.com said jobs involving maths were rated as the best for 2015 in the US because they were “financially lucrative” and offered “abundant opportunities for advancement”.

Actuaries are experts in risk management who use mathematical skills to help measure the probability and risk of future events. The profession is used by a variety of industries such as insurance, healthcare, pensions and investments.

The IFoA’s president Nick Salter said: “It’s great to see actuaries have come up as the top job and reassuring that the career an actuary can offer is highly regarded and in great demand.”

He said the skills set of actuaries could be used in a diverse range of jobs, making it a “passport to a global career”.

“Understanding how businesses operate and being able to identify and measure risks is one of the reasons actuaries are in such great demand, as it can have a major impact on the bottom line,” said Salter.

“In addition to using our mathematical and analytical skills to help businesses, it’s our ability to communicate really complex financial information where we add so much value. It’s great to see that many people find a career as an actuary one to aspire to.”

ACTUARY NAMED

TOP JOB OF 2015




INSURANCE UNDERWRITING…A FANTASTIC CAREER!




For many people, a career in Insurance is not very appealing. Perhaps it does not appear to be trendy enough to consider, unless of course there is nothing else on offer. Insurance seems to conjure up images of grey suited, old fogey type men in drab offices looking at countless sta-tistics to determine some boring trend for the year nineteen frozen stiff. Nothing could be further from the truth and many a Hollywood block-buster has been based on the role of “Insurance” in all sorts of plots and scenarios. Personally, I find Underwriting and overall “Insurance” in both the General and Life Sectors as giving a fascinating insight into human nature and I doubt even my worst enemy would describe me as being either drab or boring, so in my perception, a career as an Underwriter can be exhilarating as well as personally rewarding and is one of those hidden career options that simply do not get the attention or focus that it richly deserves. So what do these Underwriters do that is so interest-ing? Let me describe in layman’s terms.

Underwriters have the job of assessing the value of a risk so that the Insurance Company can calculate the premium that a customer has to pay for that risk to be covered by Insurance. This might involve assessing the value of a vehicle and double checking that the vehicle presented is in fact the ve-hicle that will be insured and not a false plated identical vehicle, (called a mule in the trade), while the real vehicle was wrecked weeks before. The role may also cover assessing the value of large factories, herds of exotic dairy cows, Boeing 737 aircraft or even mega Copper Mines. The point being that Underwriters have the role of looking through two dimen-sional, drab, boring written reports to perceive what the real situation is. I find it astonishing that many large organizations do not know the value of their assets, therefore seriously risking being under insured, a position where assets are valued at a much lower amount than their true value, so that should a disaster strike, the Insurance Cover is so low that the business folds. A vivid example was a couple of years ago in South East Asia when a major Motor Manufacturer simply did not have their assets revalued and a fire wiped out a mega production plant. The insurance was so low that they only recouped 10% of the cost and their share price lost 20% over night. Now that was an expensive under valuation and one that any Underwriter called in to assess the mega plant before the fire would have highlighted, probably saving the Company billions.

So to those young people thinking about Banking or the classic profes-sions of law, medicine and engineering, these are all noble careers and I would not dissuade anyone from pursuing them. BUT do not rule out Underwriting as it really is a vibrant and exciting career option, com-pletely free of any gender bias and international in scope and opportu-nity. Contact any of the licensed Brokers or Insurance Companies and see whether your aspirations and their career and development plans might just reveal a wonderful opportunity.


Gary Corbit



ZAMBIA COLLEGE OF PENSIONS AND INSURANCE TRUST (ZCPIT)

The Board of Trustees of the Zambia College of Pensions and Insurance Trust (ZCPIT) would like to inform the Nation at large that the ZCPIT is now formally registered.

ZCPIT is a new independent Trust which has been created by a consortium of the Zambian Insurance and Pension Associations and Bodies, namely:

• The Insurers Association of Zambia (IAZ); • The Insurance Brokers Association of Zambia (IBAZ); • The Zambia Association of Pension Funds (ZAPF); • The Insurance Institute of Zambia (IIZA) ; and• The Pensions and Insurance Authority (PIA).

The ZCPIT aims to become a respected centre of excellence for the Human Resource Development and Research in various areas, but mainly focusing on:

Insurance (General Insurances, Life Insurances, Health Insurance/Managed schemes, Banc assurance, Micro Insurance), Reinsurance, Pension Administration, Fund Management/ Investments, Risk Management, Actuarial Principles/Practice, and related business areas.

The ZCPIT will initially be located at the ZSIC building located next to the Zamsure Sports Complex in Lusaka and on the 4th floor of Provident House along Broadway, off Moffatt Road, in Ndola.

Further details of programme outlines and scheduling will be advised in due course.




For any clarifications, Contact :The Membership Services ManagerAccountants Park, Plot 2374 Thabo Mbeki Road, LusakaEmail: [email protected], Phone 0211374550-9,Fax: 255355 or visit our website on www.zica.co.zm

Comply with the Law!

It is law that all individuals or firms engaged to carry out any accountancy work on your behalf must be registered under the Accountants Act of 2008 and regulated by ZICA.



Risk. Reinsurance. Human Resources.

Aon Zambia

Big data, better insightsDig deeper with the risk industry’s most comprehensive data, insights and analytics worldwide. With Aon as your Household, Motor and Business Insurance Broker, you can rest assured that your Risks, Insurance and Employee Benefi ts are in capable and experienced hands.

Unite with Aon and let’s Empower Results together.

Call + 260 211 367 288 or visit aon.co.zm

Zambia Review Advert.indd 1 2015/03/03 10:05 AM

In line with positioning itself to compete with other international reinsurers, Prima Reinsurance Plc (Prima Re) has since inception subjected itself to an international rating process which is done by Global Credit Ratings based in South Africa. During GCR’s latest review, the national Claims Paying Ability rating assigned to Prima Reinsurance Plc was upgraded to A-(ZM) from BBB (ZM), with the outlook accorded as stable. Furthermore, Global Credit Ratings reaffirmed the international scale Claims Paying Ability rating assigned at B, with the outlook accorded as stable. The ratings are valid until November 2015.

The upgrade was accorded to Prima Reinsurance Plc based on the following key criteria:

The notable strengthening in capitalization and improvements in claims reserving metrics

Capital adequacy measured at very strong levels, supporting the rating.

Corrective measures were taken to increase claims reserves following an independent actuaries evaluation.

Liquidity metrics improved substantially on the back of cash proceeds from the rights issue. Management affirmed its intention to retain the existing asset allocation strategy, supporting liquidity over the rating horizon.

Prima Re has registered strong underwriting profitability, supported by low instances of high severity losses. The reinsurer’s underwriting margin averaged 25% over the review period.

The Retrocession programme is largely placed with counterparties with an intermediate aggregate level of rating strength. The net deductible per risk and event is viewed to be moderately conservative.

The international rating is capped by the Zambian sovereign rating of B, as assets are locally domiciled, and the majority of revenue is locally derived.

GCR is of the opinion that this rating may be upgraded if the reinsurer’s competitive positioning strengthens, coupled with strong underwriting disciplines.

As at 31st December 2014, Prima Re achieved growth in Gross Written Premium (GWP) of 19% to ZMW30.4 million (PY: ZMW25.43million). This was on the back of consolidation of the local market share coupled with an increase in international business sourced in new markets such as Botswana, Uganda and Mozambique.

The company had on record total assets of K43.343 million up from K43.205 million in 2013 with shareholders equity at K37.263 million.

GCR UPGRADES PRIMA REINSURANCE PLC’S RATING TO A-(ZM)



Risk. Reinsurance. Human Resources.

Aon Zambia

Big data, better insightsDig deeper with the risk industry’s most comprehensive data, insights and analytics worldwide. With Aon as your Household, Motor and Business Insurance Broker, you can rest assured that your Risks, Insurance and Employee Benefi ts are in capable and experienced hands.

Unite with Aon and let’s Empower Results together.

Call + 260 211 367 288 or visit aon.co.zm

Zambia Review Advert.indd 1 2015/03/03 10:05 AMPHOTOFOCUSZEP-RE Breakfast, Southern Sun, Lusaka



Madison Life Cocktail, Radisson Blu, Lusaka



PICZ Breakfast, 16th January 2015



APLUS LIFEASSURANCE

[email protected]

1st floor Exchange Buiding 1, Farmers House Central Park, Cairo

Road, P.O.Box 30914, Lusaka, Zambia

+260 211 234 868/9 +260 211 234 866

AFRICA PRIDE INSURANCE COMPANY

[email protected] 2, Plot No. 35991A,

Thabo Mbeki Rd,Zambia

+260 211253086/348/013+260953 661 399

FOCUS LIFE ASSURANCE

[email protected]

1st Floor,Acacia Park,building 3,Thabo Mbeki Road,P O Box 34536 Lusaka

GBG GENERAL INSURANCE

Mike [email protected] P.O. Box 36434, Lusaka +260 973 983987



LIFEWAY INSURANCE ZAMBIA LIMITED

1st Floor, Kwacha Pension House, Stand 4604, Tito Road Lusaka

+260 211 255 536+260 211 255537+260 963 216045

ULTIMATE INSURANCE COMPANY

Plot 6892/3 Los Angeles Boulevard,lusaka Tel: 250577

+260 211 255 536+260 211 255537+260 963 216045



MADISON LIFE



If it really matters - insure with us

HEAD OFFICE: Finsbury Park, Kabwe Roundabout Tel: +260 211 366703 Fax: +260 211 222151. Also available in; Chingola: 0966 643000, Chipata: 216 223371, Choma: 213 221121, Kabwe: 215 222214, Kafue: 0977 478583, Kitwe: 212 224418-9, Kasama: 0977 160032, Livingstone: 213 322817, Mazabuka: 213 230170/0977 438276, Ndola: 212 618204, Nakonde: 0964 280888/0977 123724, Addis Ababa (Lusaka): 211 256567/250011, UTH (Lusaka): 211 255914,

Solwezi: 218 821108

We believe that lasting relationships are built on trust. That is why we work tirelessly to ensure that our partners enjoy consistent insurance cover that they can rely on.

Your personal and business insurance needs are secure with us.

To select an insurance policy that suits you, visit us today.

Opening hours - 07:30 to 18:30 (week days) 07:30 to 14:00 (Saturdays)

www.picz.co.zm

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Insurance Journal July Edition Vol 4

Documents

Transcript of Insurance Journal July Edition Vol 4