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Responding to written questions from Business Chronicle, the Insurance and Pensions Commission commissioner Ms Manett Mpofu said the ongoing consultations would be finalised soon.
“These capital requirements will be finalised as soon as ongoing consultations with industry players and other stakeholders have been concluded,” she said.
She said the new capital requirements would impact positively on the performance of the insurers as the players will have stronger balance sheets that will ensure the settlement of claims timeously.
An economic commentator, Mr Trust Chikohora, said increasing the minimum threshold for insurance firms would result in the country having a stronger insurance and pensions industry.
“The review will help the public to have a stronger insurance and pensions industry on the market which will be able to reduce the risks of a number of insurers failing to pay claims,” he said, adding that this should result in the public having more confidence in the sector.
He said increasing capital levels for insurers would require shareholders of such firms to inject more financial resources.
“If the shareholders do not have the resources increasing minimum capital levels might lead to mergers and acquisitions of companies in the insurance industry,” said Mr Chikohora.
Ms Mpofu said the performance of the insurance sector could have been better than it is at the moment since the adoption of a multi-currency system in February 2009.
“As long as the growth in the economy is sluggish, not many people regard insurance as a priority. If the economy grows in leaps and bounds it is likely that more people will invest in insurance products,” she said.
Last year, Zimbabwe’s short-term insurance sector continued to grow with gross premium written increasing by $41 million from $117,31 million in 2010.
The total gross premium written by short-term reinsurers surged to $67,89 million last year compared to $50,09 million in 2010.
Short-term insurance business was largely driven by motor and fire insurance.
The growth in motor insurance business is attributable to an improved macro-economic environment that has led to increased vehicles on Zimbabwe’s roads.
The Zimbabwe National Road Administration recently said about 500 000 vehicles on the country’s roads were insured.
However, insurers have the general perception that there is still potentially untapped business in respect of uninsured vehicles.
In 2001, the Ministry of Transport, Communication and Infrastructure Development said the vehicle population in the country was estimated at 1,3 million.
The recent increase in vehicle population in Zimbabwe has been largely due to the liberalisation of the economy that has seen imported cars mostly from Japan entering the country.
Online Reporter