Six insurers miss capitalisation deadline

HARARE - Six non-life insurers have failed to meet the $1,5 million minimum capital requirement within the September 30, 2014 deadline, the Insurance and Pensions Commission (Ipec)’s latest third quarter report indicated.

The six are Sanctuary Insurance Company with capital of $1,3 million, Satel Insurance Company also $1,3 million, KMFS Insurance $460 505, Global Insurance at $662 505 while Excellence Insurance Company and Altfin Insurance Company stood at $747 625 and $906 000 respectively.

Ipec said engagements with the non-compliant insurers were on-going and will take a position once necessary measures have been put in place to protect policyholders.

“All registered and operating insurers, except six, reported capital positions which were below the minimum regulatory requirement of $1,5 million as at 30 September 2014,” it said.

“The nature of the regulatory action will, in addition to the minimum capital requirement, be determined by other factors such as solvency margins, asset quality, liquidity and failure to timeously settle legitimate claims,” added the insurance industry regulator.

It also cautioned insurers to pro-actively conduct self-assessment of their capital positions.

“…compliance should be in line with Circular 1 of 2014, and take necessary action to ensure compliance with minimum capital requirements,” Ipec said.

“The capital positions shown have not been discounted to account for non -permissible assets such as related party exposures and other issues as provided for in Circular 1 of 2014.”

According to the report, all non-life insurance companies reported solvency margins which were above the minimum requirement of 25 percent stipulated in section 24 of the Insurance Act.

“The industry average solvency margin as at September 30, 2014 was 68,41 percent compared to 65,50 percent reported as at June 30, 2014,” the report said.

However, in terms of the same section, non-life insurers should comply with both the minimum capital requirement of $1,5 million as well as the solvency margin of 25 percent.

“This therefore implies that in terms of assessing compliance with minimum capital requirements, the minimum of $1,5 million takes precedence in this case,” Ipec said.

Total assets for direct non-life insurers continued on a downward trend, which trend started on March 31, 2014.

During the quarter under review the total assets declined by 2,77 percent from $176,24 million as at June 30, 2014 to $171,37 million as at September 30 2014.

“The decrease was mainly attributable to writing off of premium debtors as well as deferred acquisition costs net of unearned commission reserves (DAC/UCR) from $40,19 million and $6,93 million as at June 30, 2014 to $33,60 million and $4,13 million as at September 30, 2014 respectively,” said Ipec.

Last month, Finance minister Patrick Chinamasa indicated in his 2015 National Budget that after having been last revised in 2013, “the (insurers’) minimum capital requirements will further be reviewed upwards.”

He said the move would “improve underwriting capacity and contain insurance business being placed outside the country.”

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.