Moving on insurance: Finance Ministry officials crack whip

Following a Killid investigation, the Ministry of Finance has sent notices to all companies ordering them to get insurance. Letters have been sent to the Afghanistan Investment Supporting Agency

Following a Killid investigation, the Ministry of Finance has sent notices to all companies ordering them to get insurance. Letters have been sent to the Afghanistan Investment Supporting Agency (AISA) and Ministry of Commerce to issue licenses only to those companies which are insured.
Director of the directorate of insurance in the Finance Ministry, Fazil Bari Mumtaz, said: “Insurance is mandatory but we could not force companies to get insurance last year. We have succeeded in making it mandatory for banks, airlines and communication companies.”
The ministry has taken action after a Killid investigation (Killid issue 508, dated 17 March 2012, Corruption cripples insurance sector) revealed insurance companies have set up offices, but growth has been hampered by administrative corruption and neglect.
Mumtaz said foreign companies were reluctant to invest in the country because of the risk. A culture of insurance would make “investments safe and attract investors into the country”, he said.
AISA has called for the creation of an independent body that will arrange insurance affairs. Spokesman Ruhullah Ahmadzai said, “Investors need assurance for their investment from the government; this is a big problem and a worry without any doubt.”
Political uncertainty in Afghanistan has inhibited investors. The government needs to make investment attractive, according to Ahmadzai. “Before any insurance company will agree to insure a project they will be looking to make sure the land availability, steady electricity, that laws are in place, and corruption is not an issue,” he said. The government cannot take on the work of insurance companies, he clarified. However, the Ministry of Power and Water can ensure 24 hours power for the project.
Mohammad Yousuf and Qudratullah have applied to AISA for insurance. They told Killid that they want insurance for their goods, cars and other things “because if the insured thing is damaged, the (insurance) company will pay the cost.”
Hasibullah Mowahid, in the economics faculty of Kabul University thinks private insurance companies will not invest in insurance because of the fragile security situation in Afghanistan.
He said, “Insurance is most important. If the government doesn’t take any action, it will affect the economy of Afghanistan a lot.” In his opinion the government must take an active role in encouraging insurance industry.
There are four private insurance companies and one public company. The state-owned Afghan National Insurance Company (ANIC) delivers health and vehicle insurance services. There are complaints that it does not settle claims by insurance policy holders.