The move to change the law on insurance to provide compensation by the State for policyholders affected by collapsed insurance companies will go a long way in injecting confidence in the industry.
As it is, insurance uptake in the country remains woefully low, in part because potential customers have to take into account the many risks associated with the industry, including delayed payments of claims or the fear of losing out when insurers collapse as happened to companies like Blue Shield, Concord and United Insurance.
Providing a cushion for consumers is critical in entrenching confidence in the market. In the past, such safeguards have either been weak at best or non-existent at worst and the latest move is a step in the right direction although more still needs to be done to reform the insurance industry in its entirety.
In addition to the regulatory framework that the government has put in place, there is need for insurance firms to embrace innovation, reduce fraudulent claims, avoid undercutting each other and become more proactive in handling claims so as to further boost consumer confidence in the industry that has struggled to grow in acceptance compared to countries like South Africa.