Zimbabwe: Tobacco Industry Suspends Three Insurance Companies

Source from:  The Herald 04/20/2012

THE Tobacco Industry and Marketing Board has suspended three insurance companies and two others from the stop order system for duping farmers of their cash. This follows an outcry from farmers over the deduction of large sums of money by insurance firms, transporters and other companies involved in the supply of inputs. The suspended firms signed contracts with farmers promising to provide inputs or deliver services. In most cases, the farmers never benefited from the inputs schemes, only to have their cash deducted after tobacco sales. TIMB chief executive Dr Andrew Matibiri said the affected firms will be named soon. "We have suspended five companies from the stop order facility to allow thorough investigations." Dr Matibiri said a number of companies were taking advantage of ignorance on the part of farmers to dupe them of their hard-earned cash. Most farmers had been seeking Government intervention in their dispute with insurance companies that were deducting money from their sales without their consent. They said they were having difficulties dealing with the insurance companies, most of which have just emerged. According to the tobacco growers, organisations linked with insurance companies promise to finance production, but do not explain that the insurance companies are guarantors of the schemes. Farmers willing to benefit from the subsequent input schemes are made to sign contracts and pay a nominal fee per hectare. The tobacco farmers ended up insuring their crop unknowingly, only to realise it when the money is deducted at the auction floors. One of the affected farmers, Mrs Sophia Marimo, who lost over US$200 in a single sale, said she joined the input scheme because she did not have enough money to produce her crop. "But I never got any assistance under the input scheme although I had paid US$55 per hectare for the five hectares of tobacco to the Zimbabwe Progressive Tobacco Farmers' Union," she said. Mrs Marimo had her money deducted at the auction floors despite having financed the crop on her own. "I am now facing difficulties getting refunds and have been told that the stop order was already processed and, as long I continue selling my crop, the insurance company will continue deducting money," she said. Mrs Marimo's efforts to get her money back from SFG Insurance Company were fruitless even after getting a supporting letter from ZPTFU. The company informed her that it was unable to refund the premiums deducted from her sales because the firm was on risk during the crop's growth and processing to the sales floor. "We regret to inform you that we are unable to refund you the premium that was deducted from your sales," said SGF's agriculture manager Mr Felix Taruvinga, in the letter. "This is because you did apply for insurance as per proposal form and we did accept your application for the insurance, meaning we were on risk during the crop's growth and processing to the sales floor. "We also wish to point out that you had two insurance policies, one being our standing for you as guarantor for which you paid US$55 to the ZPTFU, the other being the crop insurance for which you seek refund of the risk premium." ZPTFU president Mr Nicholas Kapungu said tobacco growers entered into contracts willingly and cried foul when their money was deducted at the auction floors. "We do not force farmers into schemes. Most of these are attracted by inputs and join the programme willingly," he said. Mr Kapungu said many of the farmers lacked knowledge on how the schemes operated. "SFG has deducted money from farmers' accounts because it was a guarantor for the inputs," he said. "We need to educate farmers and in cases where farmers never got inputs, they can come to our offices and we will refund them." Zimbabwe Farmers' Union director Mr Paul Zakariya said farmers should be wary of such insurance companies and unions. Enditem