THE Insurance and Pension Commission of Zimbabwe (IPEC) says there is no law that barres retailers, banks or mobile phone operating companies from selling health insurance products since most of these players are operating as corporate agents on behalf of registered insurance companies.
By Michael Gwarisa
This is however despite the growing calls by players in the insurance sector for government and insurance regulator IPEC, to level the playing field as insurers feel the presence of banks, retailers or mobile players is threatening profitability and sustainability of traditional insurance companies.
In an interview with HealthTimes, IPEC spokesperson, Mr Lloyd Gumbo said the retailers and banks selling health insurance products were doing it on behalf of registered insurance companies and the products were not a substitute for medical aid services.
“The activity of acting as an agent of an insurance company is licensable by the Insurance and Pensions Commission. As such, they are operating legally since they are registered as corporate agents. Some of the health insurance products include hospital cash plans that are distributed through various intermediaries. Both insurance companies and the agents are regulated by IPEC.
“It should be noted that health insurance products being offered to the market are complimentary to medical aid products and are not a replacement for medical aid products,” said Gumbo.
He added that practice of acting on behalf of an insurer to distribute health insurance products does not constitute an ‘invasion’ of insurance space by distribution agents.
“It actually helps to reach out to the greater percentage of the population since insurance companies cannot open branches everywhere.
“Mobile network operators, in their capacity as distribution and payment channels, are facilitating the advancement of insurance inclusion in line with the National Financial Inclusion Strategy (2016 to 2020). The mobile network operators are also regulated by POTRAZ from a communication viewpoint and the Reserve Bank of Zimbabwe as payment platforms. From regulatory point view, agents and technology platforms help to advance insurance inclusion and their business practices are regulated.”
Meanwhile, Section 4(1) (a), (b) and (c) of the Insurance and Pensions Commission Act [Chapter 24:2] mandates IPEC: “to register insurers, mutual insurance societies and insurance brokers in terms of the Insurance Act [Chapter 24:07] and, subject to that Act, to regulate and monitor their business; ……to monitor the activities of insurers, mutual insurance societies, insurance brokers and pension and provident funds to ensure that they maintain set standards and ensure compliance with the Insurance Act [Chapter 24:07] and the Pension and Provident Funds Act [Chapter 24:09] ….”
“For that reason, only registered insurers are expected to write health insurance products. As indicated in our response to the first question, the activity of selling insurance products on behalf of insurers is licensable in terms of part 111 of Insurance Regulations of 1989 (Statutory Instrument 49 of 1989).
“Apart from agents, insurance brokers, who are also licensed in terms of the Insurance Act, can sell insurance on behalf of an insurance company,” said Gumbo.
However, players in the medical aid as well as insurance firms believe there is no sanity in the sector and these new players continuously flout insurance laws willy-nilly. Gumbo however pointed out that IPEC’s regulation of the insurance and pensions industry focuses on both prudential and market conduct supervision.
“With regards to prudential supervision, short-term insurance companies that sale health insurance products are required to meet the gazetted minimum capital requirement of US$2.5million, continuous solvency requirements, minimum corporate governance requirements, actuarial issues, reinsurance arrangements and liquidity requirements.
“On market conduct supervision, we check whether our regulated entities are treating their customers fairly through timeous payment of promised benefits and meeting all public disclosure requirements. Apart from regulatory requirements for insurance companies, insurance brokers, who sale health insurance products on behalf of an insurance company, have their own registration and continuous monitoring requirements.”
The insurance brokers on the other hand are required to have $250,000 as professional indemnity to safeguard against loss arising from their misconduct when selling insurance on behalf of an insurer. Such an indemnity is a mechanism to protect members of the public and they are also subjected to continuous disclosure requirements.
“With regards to agents, the insurance company, which is the principal of the agent, is liable for actions of the agent. In this regard, the professional conduct of agents is monitored by the insurer, which will be penalised by IPEC should there be any wrongdoing by the agent,” added Gumbo.
Banks currently offering health insurance products in the country include FBC, Stewart, CABS among others while clothing chain shop, Edgars is offering health insurance through its Hospital Cash plan package.