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Roberta Katunga/Ngonidzashe Chiutsi Business Reporters
AT least 11 insurers have failed to meet the minimum capital requirements for the sector and will be subjected to an investigation on their operations pending cancellation of registration, the Insurance and Pension Commission said. According to IPEC, this action is being guided by sections 22 and 67 of the Insurance Act (Chapter 24:07). Responding to questions from Sunday News Business, IPEC said six short-term insurance companies had failed to achieve a minimum capital level of $1,5 million while one life assurance company had failed to meet the $2 million minimum requirement.
In addition, three funeral insurance companies and one registered reinsurance company were not compliant by 31 March 2015 bringing the total number of non-compliant companies to 11.
“The Commission is guided by section 67 and 22 of the Insurance Act (Chapter 24:07) when dealing with under-capitalised institutions,” said IPEC.
Sections 22 and 67 of the Act deal with general provisions with respect to cancellation of registration of insurers and investigation of the affairs of an insurer so as to protect policy holders.
“In the last 24 months five insurance companies have been de-registered. These are Agriculture Insurance Company, Jupiter Insurance Company, SFG Insurance Company, Suremed Insurance Company and Altfin Insurance Company,” said the commission.
However, over 30 companies had managed to meet the minimum capital requirements to date.
IPEC commissioner-general Mrs Manett Mpofu confirmed that a majority of the companies had regularised their operations.
“There are 34 insurance companies that have met the minimum capital requirements. This is inclusive of life, non-life and funeral insurance companies,” she said.
Mrs Mpofu said there were no indications of impending mergers in the sector.
Recently, an international research group Business Monitor International (BMI) said Zimbabwe’s insurance industry was set to register double digit growth this year — in both the life and non-life sectors — despite challenges facing the economy.
In its latest economic report on Zimbabwe, BMI said the life sector will continue to dominate the insurance market and outpace non-life growth, given the attractiveness of the former as a long-term savings option.
The research firm said, despite the operational challenges affecting the country’s insurance firms, they were cautiously optimistic for the prospects of Zimbabwe’s insurance industry.
“Retention ratios are high, claims ratios are low and strong growth is expected to continue. There are, however, many persistent issues and threats. As a young insurance market, the regulatory framework remains untested, particularly in the fast-growing life sector,” said the international research firm.
Despite challenges in the sector, Finance Minister Patrick Chinamasa indicated plans to increase levies on the struggling insurance firms as a way of capacitating IPEC, which currently lacks capacity to adequately supervise the industry owing to limited technical, human and financial resources.
Minister Chinamasa said the upward review of minimum capital requirements for the insurance sector was aimed at improving underwriting capacity and containing insurance business outside the country. Minister Chinamasa said IPEC would soon be announcing the modalities for the upward review.
Bongani Ndlovu