Insurance firms struggle to meet requirements

HARARE - Credit Insurance Zimbabwe (Credsure) and Sanctuary Insurance Company (Sanctuary), have failed to meet the $1,5 million minimum threshold during the first half of this year due to deteriorating economic conditions, an Insurance and Pensions Commission (Ipec) report has shown.

This comes as 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 United States dollar values and liquidity challenges, among others.

In its report for the six months to June 2016, Ipec said Credsure had a $1,3 million capital position as Sanctuary’s capitalisation stood at $1,4 million against the $1,5 million requirement.

“All non-life insurance companies reported solvency margins which were above the regulatory minimum of 25 percent with an industry average solvency margin of 74,74 percent as at June 30, 2016,” the insurance regulator said.

This comes as Finance minister Patrick Chinamasa in his 2015 National Budget announced an upward review of the minimum capital requirements for the insurance sector to improve underwriting capacity and contain insurance business within the country.

The treasury chief 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.

However, the proposed hike is to be effected by December 31, 2016.

Ipec has already put in place a micro-insurance framework to downgrade all insurers failing to meet their respective minimum capital thresholds.

To date, New Reinsurance Company of Harare and Global Insurance Company have been de-registered while broker, Navistar Insurance Brokers also saw Ipec halt its operations on the back of unsound finances.

Ipec is also expected to start qualifying assets for calculation of prescribed assets for all insurers as well as deterrent penalties which include cancellation of operating licences

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 this session.

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