Online Reporter
Business Reporter
THE Insurance and Pensions Commission (Ipec), is developing the Zimbabwe Integrated Capital and Risk Programme (ZiCARP), a risk-based solvency regime aimed at addressing structural weaknesses in the local insurance industry.
ZiCARP is designed to enhance policyholder protection and ensure industry stability by aligning capital requirements with insurers’ individual risk profiles.
According to Ipec’s latest life assurance report, as of 2024, eleven life assurance companies had met the US dollar-linked Minimum Capital Requirement (MCR) of US$2 million — pending official gazetting — while one company had yet to meet the threshold.
“A ZiCARP-based Solvency Stress Testing Framework is being developed to guide stress tests on the balance sheets of all life insurance firms. These tests are designed to evaluate how each company’s financial position would respond to potential shocks impacting their operations,” Ipec stated.
Unlike traditional models that apply a fixed capital requirement, ZiCARP assesses capital adequacy based on the specific risk profile of each insurer.
The framework is structured around three key pillars. Pillar 1 focuses on quantitative aspects, which determine the Solvency Capital Requirement (SCR) and the Minimum Capital Requirement (MCR). Pillar 2 is the Own Risk and Solvency Assessment (Orsa), which integrates risk management into an insurer’s overall business strategy and decision-making processes. Pillar 3 addresses disclosure requirements, mandating insurers to provide sufficient and transparent information to policyholders and investors through quarterly and annual returns.
According to the life assurance report for the quarter ending December 31, 2024, the sector generated foreign currency revenue totalling US$113,30 million — a 119 percent real increase from US$51,86 million recorded during the same period in 2023.
“The increase in foreign currency business is primarily attributed to policyholders shifting from local currency-denominated policies to foreign currency policies, as a significant portion of the business is recurring,” the report noted.
During the review period, foreign currency business accounted for 65 percent of total revenue, up from 32 percent in the corresponding period in 2023 — a 103 percent increase.
“In accordance with Statutory Instrument 280 of 2020, assurance companies are reminded to invest foreign currency premiums in foreign currency assets and settle claims in foreign currency,” the report said.
Nyaradzo Life held the largest share of foreign currency business at 39,53 percent, owing to its dominant market position within the life assurance sector.
During the same period, the life assurance sector reported total assets of ZiG13,45 billion (approximately US$521,24 million), reflecting a 10 percent decline from US$580,8 million as at December 31, 2023.
Life assurance companies primarily invest in quoted equities and investment properties, which together account for 44,3 percent of total assets. These asset classes are considered more suitable in uncertain economic conditions due to their favourable risk-return profiles.
Other asset categories include insurance-related assets (0,63 percent), reinsurance assets, operating assets (10 percent) and other current accounts (14,17 percent).
Ipec emphasised the importance of aligning asset portfolios with liability profiles to ensure financial soundness and long-term sustainability.
