The Sunday Mail
Kuda Bwititi Chief Reporter —
Insurance companies are allegedly awarding themselves millions of United States dollars meant for road accident victims and their families, The Sunday Mail has gathered. According to Statutory Instrument 124 of 2009, families of deceased accident victims are supposed to receive up to US$2 000 each, with survivors entitled to US$350 medical fees.
However, it has emerged that many insurance firms have not been disbursing this money, sharing it among themselves instead. Highly-placed sources in the insurance sector told The Sunday Mail that a big scandal is playing out as firms always remain with a surplus from premiums paid by motorists. The sources said insurance companies shared US$9 million in 2015, with less than US$1 million going to beneficiaries.
One source said, “The loss ratio in Zimbabwe’s insurance sector is very low and this means that these companies have a surplus which they distribute among themselves.
“Money meant for accident victims is being retained by the insurance companies for their own use.”
Another added, “Last year, we had US$9 million shared among the companies, but less than US$1 million was paid out to victims. It appears the insurance sector is more concerned with profiteering than delivering its mandate.
“The big question is what is the point of having compulsory vehicle insurance when it is not effective? It now appears as if insurance is some form of tax which should just be paid on demand without return of service.”
Responding to inquiries from The Sunday Mail, the Insurance Council of Zimbabwe said the Motor Insurance Pool, a reserve fund for all vehicle insurers, was justified, but would not be drawn into divulging figures.
“The Motor insurance Pool (MIP) is merely a special purpose underwriting vehicle for all insurance companies, and insurance companies are the ultimate risk-carriers on a joint and several basis.
“Therefore, insurance companies do not receive any payout as it were, but receive premiums which would have been temporarily housed by the Motor Insurance Pool in line with the agreed administrative set-up.
“It must be noted that in the event of claims arising after the premiums have been forwarded to the insurance companies, insurers will be called upon to meet those claims. Therefore, all the money (premiums) in the MIP belong to insurance companies in the first place.”
Insurance expert Mr Nicholas Tauro said insurance companies and transport operators should shoulder the blame for failing to pay adequate compensation to accident victims. “Some transport operators are not buying passenger cover, and some insurers are retaining the risk and not re-insuring such that it becomes a capacity issue.
“Fraudsters also produce and sell fake licences to unsuspecting operators, and it’s usually proven fake after accidents and then insurance companies disown the holders.”
Traffic Safety Council of Zimbabwe managing director Mr Obio Chinyere said, “Compensation for accident victims is hard to come by and I think the blame should be shouldered by everyone – insurance companies, passengers as well as the transport operators.
“It seems most passengers do not know that they have a right to compensation because there is a huge information gap. The process to apply for insurance is also cumbersome and may take up to three months. So people usually get frustrated and stop processing their claims before the process is complete.”
The Department of Civil Protection acting director Ms Sibusisiwe Ndlovu said some insurance companies are paying amounts below the prescribed fees to accident victims.
“The challenge is that some insurance companies promise to pay but then do not honour their payments in full. Another major challenge is that accident victims may not be aware of their rights and where to go,” she said.
