Police absence headache for insurers

Insurance executives will tell an analysts briefing their companies are now in the business of paying claims owing to the absence from the roads.

Source: Police absence headache for insurers – The Standard July 9, 2018


They might not have foreseen the spike in accidents which has affected short-term insurers.

Since the ouster of former President Robert Mugabe in November last year, lawlessness has creeped in among motorists on the country’s roads and in the cities. The police and municipal law enforcers have been reduced to mere spectators, especially in the central business districts with the police now reduced to controlling traffic only at intersections.
Insurance executives who spoke to The Standard yesterday said the situation needed to be arrested as a matter of urgency.

“If you drive in town, you see no less than five accidents per day. This is attributed to reckless driving and lawlessness where unlicensed drivers are on the roads,” the executive said.

“Police and municipal officers used to at least bring sanity before they were emasculated. Their absence has meant that road rules are being violated.”

Another executive who would not be named owing to the industry position that only one representative speaks on behalf of members, said rising costs of repairs have meant that damages to an insured car would be equivalent to a write-off.

“If you insure an ex-Japanese car for $5 000 and it is involved in an accident, it will be a write-off. To buy the spare parts and the cost of panel beating will come to $5 000. This will be equivalent to buying a new car. This is not sustainable,” he said, adding that his company is considering not writing business for ex-Japanese vehicles.

Motor vehicles are the cash cow for short-term insurers contributing nearly half of the $236,47 million gross premium written by the sector last year. It raked in $103 300 734 which was 10,90% up from 2016.

For non-life reinsurers, motor business declined by 4,36% last year at $14,99 million while the industry reported an increase in gross premium written to a jump in hire purchase and health insurance products.

In non-life insurance report for 2017, the Insurance and Pensions Commission encouraged the industry to engage in product innovation to manage affordability issues and address concentration risk related to overreliance on a few product lines, especially motor insurance.

The second hand vehicles have become a hit as they are affordable compared to new vehicles.

The importation of secondhand vehicles has been growing by 87,45% annually over the years. In 2016, secondhand imported vehicles totalled 62 619 against 3 393 new vehicle units sold. This has seen government moving to protect local car assemblers. The Zimbabwe Motor Industry Development Policy seeks to ban the importation of secondhand vehicles to spur on local assemblers.