OLD Mutual Insurance Company has indicated that the government's delay in providing details on the transition of third-party insurance from local providers to government control is hindering its ability to plan effectively.
In the 2024 National Budget, Treasury announced that due to the increase in car accidents, the government would take over third-party motor vehicle insurance in line with international trends.
However, several months later, local insurers are still awaiting specifics on how this transition will be implemented.
“In the 2023 budget presentation, the authorities made the intention to take over the administration of third-party insurance currently underwritten by private insurers. Details of how this will be implemented, or the start date are still to be communicated,” Old Mutual Insurance chairperson Bongai Zamchiya said.
“We are, however, inputting into the industry engagement processes to ensure a win-win position is reached in achieving government goals as well as the preservation of the industry and jobs.
“Our focus will remain on enhancing our products and services so that they remain competitive.
“We will also continue to conduct our business in a manner that is open, fair, transparent, and sustainable, and embrace technology to drive productivity, innovation, and service,” he said.
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Zamchiya said while the company has made notable progress in executing its strategic plan, policy changes remain a threat to the overall business.
This announcement comes as Old Mutual Insurance posted an 81,34% increase in profit after tax to US$3,54 million for the financial year ending December 31, 2023, driven by new insurance products. This is a significant increase from the prior year's profit after tax of US$1,95 million.
“Key risks to the outlook remain geopolitical tensions, climate related risks, electricity challenges, currency volatility, and policy changes,” Zamchiya said.
“Climate change related risks will continue to threaten output in the agriculture sector globally and in our local environment.
“The impact of the El Niño event threatens food security in the short-term.
“We will continue to monitor new regulatory developments and policy changes and respond in a timely manner,” he said.
Addressing these concerns, Insurance and Pensions Commission commissioner Grace Muradzikwa stated that they were working on a comprehensive overhaul of how third-party insurance is distributed to motorists.
“Yes, indeed there was that budget pronouncement. The update at the moment is that there are still ongoing consultations,” she said. “You will appreciate this would require remodelling the way third-party insurance is conducted in this market and it impacts on a whole lot of things.
“The legislation that is in place, the model itself, among other things. So, there are still ongoing consultations.
“And, in terms of feedback, we are always in communication with the industry. As far as the industry is concerned, they are quite in the loop in terms of the ongoing engagements that are going on,” Muradzikwa added.
