The Minister of Finance and Economic Development Kenneth Matambo promised Aon Botswana will advertise openly after its contract with government employees comes to an end to allow the market to allow beneficiaries to choose their own insurance company.
For the past 17 years Aon Botswana has enjoyed monopoly in the insurance services contracted for three consecutive terms – one for four years and two of five years each under the Government Employee Motor Vehicle and Residential Property Advance Scheme, leaving other competitors in the same business fumbling for clients.
“The first contract was extended three times for a period of one year per an extension, meaning to date Aon Botswana has been contracted for almost 17 years with the current contract ending, March 31, 2020,” Matambo acknowledged in Parliament on Thursday.
The Finance Minister was to opposition UDC Member of Parliament Haskins Nkaigwa who is worried Aon Botswana has enjoyed dominance offering loans for Government employees on motor vehicle and residential property on advance initiative for many years.
“I agree with the honourable MP for the liberalisation of the market to advertise openly. The move will take place after the elapse of the current contract so that others could take part,” he added.
Rival competitors were concerned about the arrangement and approached the opposition MP for change of the status quo.
In accordance with the Public Procurement and Asset Disposal Act all contracts awarded to Aon Botswana for management and administration of Guaranteed Loans Insurance Fund were awarded through open tender method which will prove otherwise as the same will not advertised for competition.
All properties acquired under GEMVAS is insured under the Guaranteed Loans Insurance Fund which is an insurance vehicle for government guaranteed loans which is a condition for all public officers.
“Therefore government has an obligation to monitor and ensure that funds advanced to the public officers are protected against risk of default. In the at regard it is not feasible (presently) to allow the beneficiaries to arrange their won 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 beneficiaries’ salaries,” Matambo noted.
The current premium rates are determined on the basis of insurance market conditions set by the Fund with guidance actuaries. Therefore any changes to the premium rates that may occur at any given time are informed by trends in the local insurance market space.
Matambo is also aware of the current premiums which are “slightly” above market rates certainly motivated by Aon Botswana monopoly, insisting the Ministry is currently in the process of reviewing the premiums to align them to the market rates.
“I wish to emphasise that Aon Botswana is only engaged to provide administrative services on behalf of the Ministry,” the Minister further reassured, adding “the excess rates applicable and payable in instances of insured events are not determined by Aon … but have been prescribed in the GLIF policy document by my Ministry with advice of an actuarial company.”
“As indicated the policy is under review and it is expected that the insurance conditions will be improved,” Matambo concluded.