Consumer Court: A sure way of getting nothing for something
By Milton Louw
At the end of every month I enjoy going to one of the big casinos in Windhoek and trying out my luck on the slot machines. Sometimes I win a little, but most of the time I lose. While there though, I have noticed quite a few gamblers who seem to lose often and they become quite vocal when they lose saying that the casino management is purposefully preventing “their” slot machine from winning. They believe that after all the money they have spent, they should be getting a return on their investment.
The dictionary defines gambling as “taking a risky action in the hope of a desired result”. In the case of a gambling house, the owners are sure they will get their money as there is only a certain percentage that actually gets paid out in winnings. This percentage of winnings and other legal aspects are controlled by the Ministry of Environment and Tourism through the Casino and Gambling Houses Act 32 of 1994.
Most consumers throughout the world are aware that giving a businesses a “free-hand” will lead to them maximising their profits while giving as little as possible back the client. Thus in the case of casinos, governments must put in place legislation to ensure that the gambler has a certain percentage chance of winning.
If we take the definition of gambling and we look at various business models we will notice that very often a business idea is a “risky action in the hope of a desired result”. Take life insurance: A life insurance company takes the risk that should you die, they must pay you a certain amount of money even if the amount you have paid in does not yet equal that amount the insurance would pay out. This means, the company is taking your money in the hope that you actually live long enough to pay them more than the amount that they have to pay out on your death. The insurance company is of course working with a profit motive to make money for the owners so the company must do everything in their power to reduce the risk to get their own desired result – namely that you should stay alive as long as possible. If the company finds it difficult to reduce your chances of dying, they must find other methods of reducing their risk. Insurance companies thus spend a lot of time in risk management and putting in place agreements that will be of maximum benefit to themselves without scaring away their customers. Therefore most insurance companies have mechanisms in place to reduce the amount they have to pay out in the case the “desired result” is not in their favour.
Here too governments have to play their role and regulate the market to ensure the customer on the street is being benefitted in the manner they expected – especially as that customer is now no longer among the living to ensure the contract is upheld by the life insurance company. To this end the government has created the Namibian Financial Institutions Supervisory Authority (NAMFISA). It operates under the auspices of the Ministry of Finance and it has no profit motive.
I believe that taking out life insurance is not a gamble but a risk reduction factor in the planning of my financial matters. As a consumer, I must hope that the government through NAMFISA will ensure that my interests are looked after even when I am in my grave. Looking at the present capability and track record of the regulator, I wonder if it will be there for me, against the insurance company?
*Milton Louw is a consumer activist and prolific blogger on consumer protection issues (http://milton-louw.blogspot.com). He serve as the voluntary director at Namibia Consumer Protection Group.