Policyholders are being given the option to either be paid cash for their policy values or to transfer them to existing products, in which case they presumably remain policyholders on the company’s books. There is an interesting rider to this offer — the option of being paid cash is allowed only if the policy value is less or equal to US250. Where the policy value is greater than US250, the policy “must remain in force with benefits payable from age 55.” This, according to the company, will enable policyholders to invest more contributions into their policies until maturity.
What the Old Mutual advertisement does not explain is the rate of conversion from the defunct Zimbabwe dollar to the US dollar and the basis of that rate. Like scores of pensioners whose monthly pension payments were whittled down to just a few dollars as a result of the devaluation of the Zimbabwe dollar, most of the insurance policyholders are likely to be seriously disappointed when they see the bottom line on their precious policies.
A university technician friend, who must remain nameless to protect his professional integrity, especially now that he lives in virtual destitution, was paid a staggering 19 billion Zimdollars as his retrenchment package. This amount, which seemed adequate to his needs at the time, was deposited into his bank account from where, unfortunately, he could not withdraw to use it or invest elsewhere because of the withdrawal limits imposed by the RBZ at the time. No prizes for guessing what happened to the man’s saved billions after the removal of zeros and the total collapse of the Zimbabwe dollar.
Back to the Old Mutual undertaking: Many policy holders are anxious to know whether in calculating the conversion to the multi-currency system, any consideration was given to the vast building properties and other assets that the company acquired before hyper-inflation wiped out the original value of most of those policies. While indeed, the period of hyper-inflation may have adversely affected incomes on many of those properties, it stands to reason that many of the insurance firms had reaped considerable profits from these properties prior to the depression.
And with the modicum of economic recovery following the setting up of the inclusive government and introduction of the multi-currency regime, there has been an up-turn, no matter how small, in the business operations of not only Old Mutual but other insurance firms from which policy holders, who in reality are the key stake-holders, can benefit from.
The US$250 threshhold suggested as the minimum for those whose policies are considered eligible to continue, seems to suggest that the majority of policies probably fall below this amount.
While insurance companies are in it for the business and obviously suffered considerable prejudice in income and profits as a result of the catastrophic hyper-inflation the country went through, the worst loser in all this is the poor policy holder who, ultimately, has no say on how the income from assets to which they contributed through a lifetime of monthly contributions is distributed, If there is a grievance for which I as an individual, and no doubt thousands of similarly affected Zimbabweans will never forgive Reserve Bank Governor Gideon Gono, it is his role in trashing our life policies by causing the inflation that destroyed the Zimbabwe dollar.
By loping off the zeros from the Zimbabwe dollar on two occasions, Gono single-handedly reduced to eternal penury thousands of us who had worked for many years paying life and pension premiums religiously, in the hope and belief that we would retire in reasonable comfort on our policies.
It is deplorable that many of those in their mid-fifties and above find themselves virtually starting afresh in trying to save for their future with absolutely nothing to show for the 30 or so years that they have been in employment.
In normal countries where the government takes the welfare of its citizens seriously, there would be a basis for state intervention to ensure that those prejudiced by its desperate actions that resulted in the devaluation of the local currency are not prejudiced to the extent of losing their entire life’s savings.