Source: Lack of disclosures delays compensation of insurance policyholders | The Sunday Mail
The RBZ in Harare Business Reporter
LACK of sufficient disclosures by the insurance and pensions industry is delaying the currency conversion that is critical to finalising the compensation process for loss of insurance values in 2009, the Insurance and Pensions Commission (Ipec) has said.
Compensation is expected to restore confidence in the pensions and financial services sectors.
Last year, the Government set aside US$175 million for the exercise.
Pension funds were asked to come up with their frameworks and payment plans.
However, the Commission, through Circular 8 of 2025, has extended the deadline for submitting audited financial statements of pension and provident funds to May 31, 2025.
It also indicated that it had not approved any of the currency conversion reports submitted by the industry, as most of the conversions were not done in line with the relevant International Financial Reporting Standards.
Ipec noted a lack of sufficient disclosures in actuarial conversion reports, including instances where some entities did not show actuarial liabilities before and after currency conversion.
“The above observations compromised the credibility of the currency conversion exercise, resulting in the commission not approving any of the submitted currency conversion reports,” it said. “To ensure the currency conversion process is accurately done, all entities are required to include supplementary information in the 2024 audited financial statements that show the following details as of April 5, 2024: The income statement/statement of changes in net assets available for benefits before and after conversion, the statement of net assets available for benefits before and after conversion and a detailing of how the conversion was carried out.”
Actuarial reports as of December 31, 2024, the commission added, should sufficiently provide supplementary actuarial information relating to the 2024 currency conversion as outlined in circulars 8 and 11 of 2024.
The regulator also added that the reporting period is 12 months in 2024; therefore, the financial statements should have ZiG (Zimbabwe Gold) 2023 comparatives.
“Consequently, by May 31, 2025, regulated entities should ensure that they have submitted all the reports and related disclosures as detailed in Circular 34 of 2022,” Ipec said.
Failure to comply with the provisions is an offence, which attracts a category 1 civil penalty in terms of Section 31 (4) of the Act.
Analysts believe the pre-2009 loss of value remains an outstanding issue that continues to undermine trust in the financial and pension industry.
The Justice George Smith-led Commission of Inquiry, which was established in 2015, found that some policyholders and pension scheme members were prejudiced by the conversion process during dollarisation and recommended they be compensated. The commission blamed the erosion of value largely on poor regulatory enforcement and the demonetisation of the local currency.From these experiences, policyholders and pension scheme members feel they were shortchanged, and, as a result, their confidence in insurance and pensions is low.
Protecting policyholders
According to the Life Offices Association of Zimbabwe (LOAZ), which represents life insurance companies in Zimbabwe, insurance penetration in the country was at its peak in 2004, reaching 5,7 percent. However, it declined to 1,5 percent in 2016 and remained below 3,6 percent in 2022.
LOAZ secretary-general Mr Rufai Mavukeni recently said in order to build resilience, trust and confidence in the sector, assets related to the customers need to be protected.
“As the industry, we are saying from experience, the assets related to our policyholders need to be protected to avoid loss of value that has happened before,” he said.
Mr Mavukeni said in future, the industry will work with policymakers to come up with policies that will protect the assets against inflation.
“We were allowed to start investing offshore last year to protect some of the values that we hold on behalf of our customers. However, the procedure to invest offshore will be simplified this year, and that will allow us to be able to raise our investment outside,” he said.
The Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mushayavanhu, recently said pensions provide financial security and dignity in retirement, encouraging long-term savings and contributing significantly to national capital formation.
The insurance and pensions industry in Zimbabwe, he said, has been playing a critical role in mobilising domestic savings and supporting investments in infrastructure and long-term projects.
Dr Mushayavanhu said these initiatives enhance the overall resilience of households and businesses, which is key in achieving inclusive economic growth and sustainable development, in line with Vision 2030 and National Development Strategy 1.
“The Reserve Bank’s role is to ensure long-term price, currency and financial sector stability. Low and stable inflation ensures certainty and predictability in monetary and financial affairs and provides a conducive macroeconomic environment to support insurance and pension funds,” he said.
He added that macroeconomic stability supports value preservation of long-term savings and investments, and this can be efficiently tapped to support long-term growth and development.
“Unfortunately, past events and policies resulted in the erosion of value for pension funds and investments.
“People still have scars from losses incurred in prior years, and it is important that we work hard to restore macroeconomic stability, which is a prerequisite for value preservation. In this regard, the Reserve Bank has been making concerted efforts to ensure lasting macroeconomic stability since April 2024.”
The central bank, Dr Mushayavanhu added, has reconfigured and reoriented its monetary policy to focus on its core mandate of price stability.
“As a result, we have been pursuing an appropriate monetary policy that balances stability and growth. This has resulted in low and stable monthly inflation, which declined to -0,1 percent in March 2025, while at the same time the exchange rate has seen greater stability.”
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