Risk Management Practices for Short-Term Insurance in Zimbabwe
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Date
2014-07
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Abstract
The study examined the current risk management practices of insurance companies and revealed that the risk management practices are not adequate. The objective of the study was to document the risk management practices in the short-term insurance industry. The key features investigated are risk management culture, risk control and extreme event management. A questionnaire was used as a research instrument for data collection. Closed questions were structured on a five point Likert-scale. A total of eighty six questionnaires were sent to short-term insurance companies. Purposive sampling was used to come up with research participants. The research participants comprised of claims processors, credit controllers, interns, managers and underwriters in the short-term insurance industry. The study period was from February 2013 to May 2013. The analysis was carried out in SPSS 16.0. Additionally, secondary sources which include journal articles were used to supplement the primary data. There is poor risk management culture in short-term insurance companies. The results show that the risk management practitioners in the Zimbabwean short-term insurance industry are not appropriately qualified and management does not view risk management as a tool that can provide their firms a competitive edge. Insurance companies have measures in place to manage high frequency low severity events, however have no measures in place to envision and manage low frequency high severity events. The implications of these findings are that, for a new approach like Enterprise Risk Management (ERM) to succeed there has to be a paradigm shift in the Zimbabwean short term insurers’ approach to risk management the first being to strengthen their risk management culture. The efforts to adopt ERM must start in the board room and the short term insurance companies should integrate risk management into their organisation’s objectives, philosophy, practices, and strategic plans.
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Mazviona, B. W. (2014). Risk Management Practices for Short-Term Insurance in Zimbabwe.