HARARE - The Insurance and Pensions Commission (Ipec) has suspended four insurers and an insurance broker from issuing or renewing insurance policies due to unsound finances and unethical business conduct.
“Excellence Insurance Company (Private) Limited is under suspension as its financial position was unsound, as was Global Insurance Company (Private) Limited,” Ipec said adding that the suspensions were issued in terms of section 5 (a) of the Insurance Act (Chapter 24:07).
The other insurers barred from issuing or renewing policies include KMFS Insurance Company (Private) Limited and New Reinsurance Company (Private) Limited on the basis of unsound finances.
According to the commission, short-term insurance companies are required to have a minimum capital requirement of $1,5 million but Excellence had $250 000 by end of June last year while others had varying amounts less than $1 million in the six months to June 2015.
Navistar Insurance Brokers (Private) Limited was placed under suspension for unethical business conduct.
According to Ipec, all clients who had already purchased or renewed policies with the five firms are free to launch claims with the insurers.
“In the event that some members of the public have already purchased or renewed policies with the above mentioned companies, please note that these companies remain liable to honour claims arising from the same policies… any refusal to pay should be reported to the Ipec,” the watchdog said.
In his 2015 National Budget, Finance minister Patrick Chinamasa expressed the need for an upward review of the minimum capital requirements for the insurance sector to improve underwriting capacity and contain insurance business within the country.
To match this, the Treasury chief increased the minimum capital requirements for both life and non-life reinsurers in his 2015 Mid-term Fiscal Policy Review Statement.
The proposed hike is to be effected by December 31, 2016.
Chinamasa hiked the minimum threshold for short term insurers from $1,5 million to $2,5 million, from $2 million to $5 million for life assurers and pegged the minimum capital requirement for funeral assurers at $2,5 million from $1,5 million.
Chinamasa also proposed to introduce a raft of measures that included the review of qualifying assets for calculation of prescribed assets as well as deterrent penalties which include cancellation of operating licences
The Treasury chief ordered Ipec to, in the first quarter of 2016; review the qualifying assets for minimum capital requirements to improve asset quality.
The performance of the insurance and pension sector has largely remained depressed owing to low economic activity, legacy issues emanating from the conversion of insurance and pension policies from Zimbabwe dollar to US dollar values and liquidity challenges, among others.
Presently, the draft Bills for the insurance and pension industry are being finalised, taking into account stakeholders’ inputs.
The Bills include the Insurance and Pension Commission Bill, Pensions and Provident Funds Bill, and the Insurance Bill and are expected to be presented in the August House in the first quarter of 2016.