Zimbabwe: Insurance Policyholders Reel From Price Increases As Inflation Ravages
Funeral assurance policyholders are bearing the brunt of ever-increasing premiums as companies in the sector adjust prices in line with rising inflation.
As Zimbabwe slides into hyperinflation, most businesses are struggling to survive and have adopted cost recovery pricing models in order to remain viable.
Zimbabwe Association of Funeral Assurers (ZAFA) general manager Taka Svosve said the economic situation in the country is affecting both funeral assurance companies and employees.
Hyperinflation has forced an increase in premiums.”We do appreciate that our policyholders’ income has not increased in tandem with inflation, particularly that of salary earners, but you would realise that we are left with no better option. If we don’t increase the premiums because salaries have not gone up, eventually we will not be able to provide the service and the same policyholders will be up in arms with us as funeral assurers,” he said.
“It is actually a catch 22 situation that we find ourselves in where we are not able to control the cost and increase the salaries or income of our policyholders for them to be able to match the increased premium.”
Employees have been hit hard by the increase of premiums since some of the funeral assurance companies are gobbling up to 40% of employees’ salaries.
Svosve said the push factors of the increased premiums are inflation and loss of value of the currency that the country is experiencing.
“We really do appreciate that salaries have not increased but bear with us the insurers we are trying to maintain a balance between the premiums and maintain the policyholder value,” he said.
Svosve said the increase in premiums was necessitated by the sustainability of funeral assurance companies within the prevailing economic climate, which has seen a sharp rise in prices of most goods and services.
“Of late, funeral assurance companies have increased or reviewed their premiums to their policyholders. This was mainly pushed by the desire to maintain or preserve policyholder value when it comes to meeting claims remit.
You would realise and appreciate that the buying power of our currency has been eroded by the current inflationary pressures particularly,” he said. “We moved from the US dollar era so the funeral assurance companies found it necessary to review the prices, in this case the premiums of funeral services policies, in order to match the increasing prices of the components or factors that are part of meeting the claim.”
If the situation continues, the funeral assurance companies may be faced with many defaulters due to the inability to pay premiums since citizens’ wages have remained stagnant whilst the basic commodity prices are skyrocketing on a daily basis.
“Yes, we know under the same circumstances policyholders may push actually insurance to the bottom of their priority list but again that is not our intention for them to fail to pay their premiums. We continue to advise them to maintain their polices at least for now. We are sure that sometime or very soon in the future the circumstances will change,” Svosve said.
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