Ndakaziva Majaka 3 July 2017
HARARE – The Insurance and Pensions Commission (Ipec) is threatening to
de-register insurance companies and brokers that are failing to meet
client claims on time in the wake of a worsening economic situation, the
businessdaily can report.
With the operating environment buckling to a serious liquidity crisis
occasioned by the cathartic company closures, and soaring unemployment,
the insurance industry is also feeling the heat.
A number of insurance firms and brokers are struggling to honour their
claims, courting the ire of Ipec, which regulates insurance and pensions
business in Zimbabwe.
Tendai Karonga, Ipec’s commissioner, on Saturday said the regulator was
looking into all players that are failing to deliver on their claims
promises on time, with stiff penalties in the pipeline.
“An insurance company or insurance agent/broker worth his/her salt, does
not mislead potential insurance customers by over-promising what a
specific policy covers or what they stand to benefit,” said Karonga.
“The commission frowns upon insurance companies or insurance
agents/brokers who deceive unsuspecting potential insurance customers all
in the name of making money at the expense of policy holders,” he said at
the Insurance Day commemorations in the capital.
Last year alone, Ipec struck a number of insurance firms off the register,
chiefly for failing to meet minimum capital requirements. These included
New Reinsurance Company of Harare (Private) Limited, Global Insurance
Brokers, KMFS, Excellence Insurance and Heritage Insurance.
Since the adoption of the multi-currency regime in February 2009, a number
of insurance firms have also found the going too tough. Those that have
collapsed since Zimbabwe ditched its local unit due to hyperinflation,
include the Agricultural Insurance Company, Altfin, Jupiter Insurance, SFG
Insurance Company and Suremed Health Insurance Company.
At the weekend, the commissioner said it was the duty of insurers, their
agents or brokers to educate existing or potential policyholders about
insurance products that are on offer by explaining both the benefits and
disadvantages of such policies.
“That way, the insurance consumer will be able to make an informed
decision based on truthful information that they would have been given,”
This comes as Karonga recently said the commission was moving to compel
all insurance companies into publishing financial statements as part of
strategies to promote transparency and increase credibility in the sector.
He said insurance fraud – estimated to gobble around 30 percent of premium
funds annually – had necessitated the measure, anticipated to be effective
by end of March next year.
Presently, only listed insures publish their financials, with the rest
reporting exclusively to Ipec.
“The commission, through proposed amendments to the Insurance Act, will
require that all insurance companies publish their financial statements,
regardless of whether they are listed on the stock exchange.
“This will help in instilling market discipline since stakeholders will
now be more informed and will therefore punish insurers whose financial
statements will not be depicting a good standing,” Karonga said recently.
As part of measures to curb insurance fraud and maintain corporate
governance in the sector, Karonga also said the regulator was going to
start vetting office bearers.
“The commission has come up with fit and proper assessment criteria to vet
all proposed office bearers for key positions within an insurance company.
This criterion will be looking at qualifications, experience as well as
integrity of the proposed appointees,” he said.
He noted that insurance companies needed to borrow a leaf from colleagues
in the banking industry by crafting comprehensive risk management systems.
” . . . This will enable a detailed analysis of the risk management
situation in the annual financials which are then used by different
stakeholders,” he said.
Ipec is a result of the enactment of the Insurance and Pensions Commission
Act (Chapter 24:21).
Its functions of Ipec in terms of Section 4(1) of the Act include that of
registering insurers, mutual insurance societies and insurance brokers in
terms of the Insurance Act (Chapter 24:07) and, subject to that Act, to
regulate and monitor their business.
The commission is also mandated to register pension and provident funds in
terms of the Act and, subject to that Act, to regulate and monitor their
management and administration.
It also exists to monitor the activities of insurers, mutual insurance
societies, insurance brokers and pension and provident funds to ensure
that they maintain set standards and ensure compliance with the Act and
the Pension and Provident Funds Act (Chapter 24:09), as the case may be.
Its other functions include providing information to the public on matters
relating to insurance and pension and provident funds and to encourage and
promote insurance and investment in such funds; to advise the minister of
Finance on matters relating to insurance and pension and provident funds;
and to perform any other function that may be conferred or imposed on Ipec
in terms of the law or any other enactment.