Insurance sector urged to contribute to economic growth

Michael Magoronga, Midlands Correspondent

Finance and Economic Development Minister Professor Mthuli Ncube has urged the sector to adhere to the sector’s requirements and contribute positively to economic development.

Prof Ncube noted that while both sectors play key roles in the financial sector by ensuring sustainable growth through mobilising savings, directing funds into productive sectors as well as management of risks among other key roles, there was no justification for continued non-compliance.

 He said the Government now confers prescribed asset status even on private equity.

The insurance and pensions sector falls under the Macro-Economic Stability and Financial Re-Engagement National Priority Area of the National Development Strategy (NDS1)

Prof Ncube made the remarks during the Insurance and Pensions Media Awards held in the capital last week.

The awards are meant to acknowledge, reward and inspire journalism excellence in the coverage of insurance and pension matters.

“Government notes the pensions and insurance sectors’ investments in prescribed assets in 2022, which amounted to $74 billion and $41 billion, constituting seven percent and nine percent of the industry assets, respectively.

“These levels are below the prescribed levels for the insurance and pensions industry, which is regrettable. I call upon the sector to comply with this statutory requirement” he said.

He added: “Notwithstanding the low levels of compliance with prescribed assets, the Government acknowledges the role that the insurance and pensions industry plays in the economy.”

Last year, Government launched the National Financial Inclusion Strategy II (2022-2026).

“As stated in NDS 1, financial inclusion is key in promoting inclusive growth by providing access to financial services, loans, credit and insurance by previously marginalised segments.

“This allows the previously marginalised to engage in gainful economic activity,” he said.

Pursuant to this objective, IPEC had licensed 10 micro-insurance companies as at 31 December 2022.

“This is a critical development towards facilitating access to and usage of insurance products by previously excluded segments of society.

IPEC is also spearheading various projects, among them the Innovation Lab, Agricultural Index Insurance and the Bima Lab whose objective is to come up with insurance solutions for smallholder farmers to mitigate the effects of climate change.

“This is well-aligned with the Food and Nutrition Security Cluster of NDS1,” said Minister Ncube.

He said the Government is also aware that IPEC is developing a Micropensions Framework, which will facilitate access to and usage of formal retirement savings by those with low and irregular income, particularly the informal sector.

“This will enhance social insurance and social security coverage as envisaged by NDS1. I call upon the pensions sector to be innovative and come up with appropriate products that meet the needs of the targeted beneficiaries,” he said

Prof Ncube said the insurance and pensions industry is grappling with low confidence due to the low values that policyholders and pensioners got after adoption of the multi-currency system in 2009.

“However, I am glad that finalisation of the compensation exercise as recommended by the Commission of Inquiry into the Conversion of Insurance and Pensions Values from the Zimbabwe dollar to the United States Dollar, is almost done.

“It is the Government’s expectation that IPEC and the industry will expedite the compensation exercise, as soon as the regulations are gazetted. Compensation for the 2009 losses will go a long way in restoring confidence in insurance and pensions,” he said.

IPEC Commissioner, Dr Grace Muradzikwa said the launch of the Awards in 2018, complemented by the Journalists Mentorship Programme that the Commission is spearheading, has not only resulted in increased coverage of insurance and pension matters in the media but improvement in the quality of articles and diversity of the topics as well.

She said IPEC will continue to inspire the media to cover insurance-related matters and to capacitate journalists so that the quality of the coverage is beyond reproach adding the outbreak of the Covid-19 came as a blessing as the mentorship programme which is now being held virtually, was spread across the country.