AS promised last week, I have the pleasure of sharing my talk with Insurance Brokers Association of Zambia (IBAZ) president Fidelis Katongo on the role of the IBAZ, its achievements and challenges.
Mr Katonga states that, following the liberalisation of the economy in 1991 by the MMD government, the insurance industry which was dominated by Zambia State Insurance Corporation (ZSIC) was opened up to competition.
This led to downsizing and a formation of a number of broking firms by some ex-ZSIC employees who did not join new private companies like Professional Insurance, Madison Insurance, etc.
To protect the interests of brokers and maintain highest standards of professionalism amongst members, Mr Katongo said IBAZ was formed and was spearheaded by late Newston Chirwa while others included Mr Hastings Chiti, Mr Mark Ndila and Mrs Lydia Sibanda among others.
The pioneers had a wealth of experience from ZSIC and while running their own broking firms they teamed up as a formidable and strong organ in the name of IBAZ.
Backed by law, all broking firms are supposed to be paid up members of IBAZ.
Regarding the achievements of IBAZ, he noted that it is on record that in the early 2000s, the government introduced Value Added Tax (VAT) on insurance which IBAZ fought and the government exempted insurance business.
IBAZ argued that the penetration levels were low and increasing the cost of insurance to individuals through VAT would kill the industry.
VAT has since been reintroduced on insurance and IBAZ is still hoping Government could exempt insurance so as to stimulate growth in the industry at individual level since VAT negatively affects individuals rather companies who may claim it back.
According to Mr Katongo, the other achievement is seen in the growth of the broking firms' contribution which in 2011 was more than 30 per cent of K1.2 trillion gross written premiums.
Some of the challenges faced by the association include lack of suitably qualified persons to take up the principal positions as it is a requirement by law to have the principal officer of the broking firm to have at least seven years of experience at senior managerial level.
IBAZ is also concerned about the low levels of the Zambian society to voluntarily take up insurance which has contributed to the low penetration levels of about six per cent.
Mr Katongo said the association is of the view that Government makes certain types of insurance compulsory, for example Fire Insurance for commercial buildings.
When a commercial building guts fire not only is the company affected by loss of revenue but jobs are affected.
On the compulsory covers such as Third Party insurance, IBAZ feels that the limits be revised upwards as the current ones are a mockery, for example if 10 people are injured then they are expected to share K60.1 million.
IBAZ has nodded the hospitality industry for making Public Liability insurance compulsory for all players in this sector.
On the domestication of local transaction, IBAZ thinks that the insurance industry should be given a cooling-off period of at least a year so that policies that were effected prior to the Statutory Instrument of May 7,this year could be allowed to run until expiry.
The other challenge is the fact that Zambia is not a manufacturing economy and this means people would be facing the risk of failing to get sufficient compensation due to the exchange rate risk.
This move may also discourage foreign companies from insuring locally.
The association however acknowledges that in the long run, the move taken by Government may benefit the local economy.
On the success of members,Mr Katongo gives his formula as REA (Retain what you have and Expand it then Acquire new business.
"In this business honest, focus and passion are key," he said.
Arising from his passion for insurance in his 40 year- experience he recalls having designed the motor inspection form in 1988 after his boss tasked him to put measures on rising fraudulent claims.
The form has now been adopted [though modified by others] in the industry to ensure that physical inspection is done on motor vehicles at inception to avoid insuring already damaged vehicles by scrupulous individuals.