Poor underwriting methods threat to insurers

Poor underwriting methods threat to insurers

Staff writer

Poor underwriting methods have been identified as one of the threats to the survival of insurance companies and have serious hindrance to service delivery.

Delivering her keynote speech at the ongoing workshop hosted by Insurance Council of Zimbabwe (ICZ) and Association of Insurers and Reinsurers of Developing Countries, Elizabeth Wyns-Dogde,( AIRDC Vice President)  said one of the widely used method is the undercutting of premiums to increase market share of policies written.

“Unfortunately, the negative effects accruing to such behavior have been devastating and resulted in a tainted image for the insurance industry. This is stating the obvious that we are all aware of.

Whether it is due to lack of technical skills to calculate risks and reserves or just turning a blind eye, it has become a habit of underwriters to employ such uncompetitive strategies, unfortunately for short term gains.” she said.

The workshop under the theme, “Growth Through Disruptive Actions” is a result of the Zimbabwe insurance industry having identified areas that require attention.

Dogde said insurance operations are struggling to stay viable due to compromised solvencies, delays or even failure to pay claims is evident in some firms.

“Globally, the insurance industry is an integral part of national economies heavily invested in national assets. This challenges us to seek continuous improvement in our operations to counter situations that might compromise growth and sustainability of our operations,” she said.

She added, “Despite the duty of regulators to police our operations and ensure that recommended solvency levels are maintained and that customers are treated fairly, loopholes will always exist and insurance practitioners will always find “that particular way” to gain a competitive edge even for short gains.”

Dodge challenged delegates attending the workshop to be motivated through the workshop to be decision makers in eradicating uncompetitive practices that are not just a threat to the integrity of underwriters but a bigger threat to the solvency of insurance firms.

The workshop sought to reflect on the extent of the damaging effects of the unethical   strategic underwriting   practices prevalent   in short term  insurance industry.