Insurance firms struggling to pay claims: IPEC
Local insurance companies are struggling to pay claims, resorting to negotiating payment plans with clients, the Insurance and Pensions Commission (IPEC) revealed yesterday, and also bemoaned high prevalence of fraud in the sector.
Figures from IPEC indicate that the industry was losing over $165 million annually through various forms of fraud. Commission of Insurance and Pensions, Tendai Karonga told delegates at a workshop on how to investigate and prevent fraud that it was unacceptable for insurance companies to stagger claim payments.
“In fact a lot of you (insurance companies) are struggling to pay your claims. I am told insurance companies are negotiating payment plans to pay people’s claims,” Mr Karonga said. “That is not right, we must have the correct reserves and we must have the capacity to settle claims promptly.”
The IPEC boss said insurance fraud increased the cost of insurance to society and also impacted on the growth and profitability of the sector.
“Insurers may be left without capacity to underwrite because of this fraud, in the process exposing genuine customers because you will not be able to pay their claims on time,” he said.
With the sector normally targeted for long term investments, Mr Karonga said investors might also be dissuaded from targeting the sector if fraud cases remain high.
He said common insurance fraud in Zimbabwe included premium fraud where agents do not remit their collections to insurance companies, fictitious death claims, exaggerated claims and backdating of insurance claims.
Mr Karonga called on insurance firms to improve their internal control processes, use technology as manual systems were more prone to abuse to help address scams. — New Ziana.