Significance of insurance education

By Helen Zulu –

IF well understood and wisely utilised, insurance can prove to be handy in time of adversity.
In the case of risk management, prudent use of insurance means that one will spend less when misfortune strikes because of what one has invested in an appropriate insurance cover.
That is why insurance knowledge needs to be spread far and wide in the country to increase penetration.
According to the Finscope survey results of 2015, 42.6 per cent of Zambians have not heard about insurance with only 2.9 per cent of Zambian adults aged 16 and above reported to have insurance.
This means that 97 per cent of Zambians are paying out of pocket for expenses that are clearly insurable.
There is need to deepen insurance uptake in the country and this can only be done through insurance education among Zambians.
OESAI chairperson Charles Nakhoze says there is need for insurance providers to intensify insurance education in order to enhance insurance uptake among Zambians.
Mr Nakhoze notes that insurance education in the country is low thus, a few people knowing about it.
“I would like to urge insurance providers in the country to intensify insurance education to increase insurance uptake in the country,” Mr Nakhoze says.
He says insurance can be used as a tool to fight poverty and provide employment for the unemployed in the country if people at the grassroots are well informed.
Mr Nakhoze says if the insurance penetration is deepened in the country, the industry can be able to contribute more to the country’s Gross Domestic Product (GDP).
“We need to deepen insurance penetration in the country so that we can be able to fight poverty and create employment for our people,” he says.
Despite the insurance industry recording a growth rate of 15 per cent in 2014, compared to seven per cent registered in 2013, the level of insurance penetration has been inadequate to fight poverty and contribute to economic growth.
The Pensions and Insurance Authority (PIA) is concerned about low penetration levels of insurance in the country despite the industry recording steady growth in the recent past.
PIA chief executive officer and registrar Martin Libinga says the insurance industry in general, has continued to register positive growth for a considerable period of time but there has been low penetration in terms of business.
While the current statistics are not inspiring, this in itself demonstrates the huge opportunities that still exist for the industry to grow, support economic development and help alleviate poverty in the country.
“I have no doubt that in the years to come, the industry will be one of the highest tax payers to Government; hence so many people are now considering investing in the sector,” Mr Libinga says.
The insurance industry has seen significant growth in terms of the number of companies and those with licences with over 25 companies operating.
There is an increased interest in the industry, and there are many applications currently being processed for new insurance businesses.
However, in order to encourage people to take up insurance and appreciate the need for it, especially in areas such as agriculture, tourism, and Small and Medium Entreprises (SMEs), there is need for more providers to engage in insurance education.
The Insurance Association of Zambia (IAZ) is also calling for more skills development in the sector for it to perform effectively.
IAZ executive director Christabel Banda says the association is aware of the skills shortages in the market saying in order for the insurance industry to perform, there is need for more skilled insurance personnel in the country.
Ms Banda says there is room for growth in the sector but to do this, insurance companies need to have skilled personnel that can come up with innovative products that are able to tap into the an insured segment of the society.
She says Zambia needs staff who will create new products and services to enable the industry to provide efficient and customer centric services to clients.
“We need employees who have the know-how and skills to make our people in Zambia to want to buy insurance products and staff who will create not only local but regionally and globally competitive insurance companies, originating from our market,” Ms Banda says.
Ms Banda said another reason people don’t insure is that they do not know how they can benefit by using insurance as a risk management tool.
“So one of the things that our association does is to  conduct  consumer awareness campaigns, as an association, we have a five year strategic plan that will run from this year up  to 2018.
“We want to develop and enhance the quality of the technical capacity of insurers and reinsurers,” she says.
OESAI secretary general Eunice Ndathi says the organisation is aware of the challenge the insurance industry is facing in regards to skills shortages across the board in all population groups.
Ms Ndathi says the on-going changes in global climate and weather patterns and frequent natural catastrophes are also creating a need for insurers to train staff on more prudent underwriting techniques and claims procedures.
“The African landscape is now part of the global insurance village because of the growing global transactions and the entrance of global insurers in Africa.
This has created a need for new and improved risk management models including changes in insurance regulations that are impacting regional insurers,” Ms Ndathi says.
Increased insurance uptake and subsequent rising penetration levels are expected to be seen in the country if insurance education is taken seriously.
Through insurance education, more people can develop an appreciation of insurance.
Many of the issues regarding life insurance have something to do with cultural backgrounds, and so there is need to start there and break down some pre conceived ideas.
Slowly people will begin to understand the value of insurance and the industry will grow with higher penetration rates.