09 Apr 2017

Parliament has been informed that to date Aon Botswana has been contracted for insurance services for Government Employee Motor Vehicle and Residential Property Advance Scheme (GEMVAS) for almost 17 years, with the current contract ending on March 31, 2020.

 

Minister of Finance and Economic Development, Mr Kenneth Matambo explained that Aon Botswana had been contracted for three consecutive terms, one of four years and two of five years each.

 

However, he noted that the first contract was extended three times for a period of one year for each extension.

 

Mr Matambo said in accordance with the Public Procurement and Asset Disposal Act, all contracts awarded to Aon for management and administration of the Guaranteed Loan Insurance Fund (GLIF) were awarded through open tender method.

 

The minister said GEMVAS was a condition of service for public officers, adding that all properties acquired under the scheme were insured under GLIF, which was an insurance vehicle for government guaranteed loans.

 

Therefore, he stated that government had an obligation to monitor and ensure that funds advanced to the public officers were protected against risk of default.

 

He said ‘in that regard it is not feasible to allow the beneficiaries to arrange their own insurance as it is my ministry’s responsibility to arrange comprehensive insurance cover for all loans granted under GEMVAS and to deduct premiums monthly from the beneficiary’s salary.’

 

Mr Matambo indicated that the current premium rates were determined on the basis of insurance market conditions at the time and were set by the fund with guidance from actuaries.

 

He said the changes to the premium rates that may occur at any given time were informed by trends in the local insurance market space.

 

The minister said the current premiums were slightly above market rates, adding that his ministry was currently in the process of reviewing the premiums to align them to market rates.

 

He emphasised that Aon was only engaged to provide administrative services on behalf of the ministry.

 

Mr Matambo said excess rates applicable and payable in instances of insured events were not determined by Aon, but had been prescribed in the GLIF policy document by the ministry with the advice of an actuarial company.

 

He stated that the policy was under review and it was expected that the insurance conditions would be improved.

 

Member of Parliament for Gaborone North, Mr Haskins Nkaigwa had asked the minister how long Aon Botswana had been providing insurance services for GEMVAS.

 

He further asked the minister to state the procedure for awarding such contracts and the length of the contract and if there were plans to liberalise the insurance services for the scheme so as to allow a free market, where beneficiaries have an option to choose their own insurance

company.

 

Mr Nkaigwa also asked how fees charged to beneficiaries under this scheme by the monopoly insurance were regulated and if he was aware that due to such monopoly, the fees by Aon were very high.

 

He asked wanted to know  what was being done to protect the beneficiaries from the high excess charged by Aon Botswana. ENDS