Chronicle Editor
Judith Phiri, Business Reporter
THE Insurance and Pensions Commission (Ipec) has initiated plans to conduct a forensic audit on First Mutual Life (FML), accusing the company of submitting an unsatisfactory report during an assets separation exercise.
In a statement, Ipec said the exercise was necessitated by the notable non-compliance by several insurance companies against the FML legal requirements, which had the potential to prejudice policyholders in favour of shareholders.
“Pursuant to various enquiries from stakeholders on the planned forensic audit on First Mutual Life (FML), the Commission wishes to advise stakeholders as follows: The Insurance and Pensions Commission ( Ipec) has been conducting an asset separation exercise in the insurance and pensions industry in line with the provisions of the Insurance Act (Chapter 24:07) and the Pension and Provident Funds Act (Chapter 24:09),” read part of the statement.
The commission said the objective of the asset separation exercise was to enforce compliance with requirements of the FML legal provisions. Ipec said the spirit behind the legal provisions on asset separation was to ensure that there is no transfer of assets from policyholders to shareholders and vice versa.
“With respect to FML, the assessment done by Ipec to date, in verifying the extent to which FML complies with the provisions on asset separation, has warranted an in-depth investigation. The audit is part of the Commission’s supervisory interventions to gauge the level of compliance with the above legal provisions. The Commission expects the audit to take less than four months after signing of the contract with the appointed firm,” added Ipec.
The exercise is expected to identify assets that may have been moved from policyholders to shareholders or vice versa, quantifying the assets that may have been misallocated and apportioning them to their rightful owners and enhancing compliance with the legal requirements for asset separation as a way of improving good governance in the insurance and pension sector.
Meanwhile, in the recently released Life assurance sector report for the year ended 31 December 2021, Ipec said for the period under review the sector was made up of 12 direct life assurance companies, four composite reassurance companies and 1 378 life agents.
The Commission, however, said during the quarter under review, it received 27 complaints, 20 of which were resolved while six were still outstanding and one was referred to the other regulator as it was outside the Commission’s jurisdiction.
Ipec said the major source of complaints related to the amount received versus the anticipated amount, late payment of claims and non-payment of benefits under a policy at the time of the claim.
Bongani Ndlovu