Ipec plans capital, risk framework reforms

THE Insurance and Pensions Commission (Ipec) has embarked on a project to review the country’s insurance capital and risk framework with the view of coming up with a better model.

Blessmore Kazengura, Ipec’s acting commissioner, said the name Zimbabwe Integrated Capital and Risk Project (Zicarp) project is motivated by the quest to develop a sound insurance regulatory and supervisory framework to enhance policyholder protection.

“We have called it an integrated project because it covers three main aspects namely, a Risk-Based Capital Framework, Market Disclosure Framework and an Own Risk and Solvency Assessment Framework for implementation in the Zimbabwean insurance industry,” he said at the launch yesterday.

“The afore-stated three main aspects of Zicarp are consistent with the three pillars of Solvency II, which will be customised for the local situation.”

The Solvency II is a directive in European Union law that codifies and harmonises the insurance regulation in that region.
Kazengura said a major deliverable of the integrated project is the development of a “risk-based capital framework’’.

The envisaged risk-based capital framework is aimed at addressing the weaknesses of the current capital regime, which include “unscientifically determined minimum capital requirements”.

“While the risk-based capital framework will address weaknesses of the current capital framework, it is important to bear in mind that the implementation of the framework does not eliminate minimum capital requirements. There will still be minimum capital requirements, the level of which, will be determined by the new framework,” he said.
He further indicated that the new framework is intended to determine the capital that each insurance company and, or medical scheme should hold, based on the risks that they assume.
“It will help to ensure that each insurer can withstand any risks it is exposed to and ultimately enhancing protection of policyholders,” Kazengura said.
Through the development of “Own Risk and Solvency Framework”, which is based on the Solvency II framework, IPEC says it is seeking to align the assessment of solvency capital for insurers and medical schemes with the risks that they face.
The acting commissioner said the new Market Disclosure Framework will be aimed at promoting consistent and comprehensive disclosures by Ipec’s regulated entities for the protection of insurance stakeholders and policyholders in particular.

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