Bills amendment widens IPEC’s scope IPEC ZIM

Tawanda Musarurwa 

Senior Business Reporter 

The Insurance and Pensions Commission (IPEC) will get greater scope in the regulation of the country’s insurance and pensions sector following Cabinet’s approval of amendments to the Insurance and Provident Fund Bill and the Insurance and Pensions Commission Bill. 

The Pensions and Provident Fund Bill is expected to foster better corporate governance practices within the industry while adequately providing the legal basis for a troubled entities’ resolution framework as well as increasing the commission’s enforcement powers. 

The latter, among other powers, will give IPEC an oversight over state-run pension fund, the National Social Security Authority (NSSA) and medical aid societies. 

IPEC commissioner Dr Grace Muradzikwa told The Herald Finance & Business that the amendments will give it greater capacity to play its regulatory function better. 

“We are excited about this development because amendments to these important pieces of legislation in respect of the insurance and pensions industry are long overdue,” she said. 

“As stated by the Government, the amendments seek to align our legislation with international best practice and to capacitate the regulator to exercise its mandate effectively and efficiently for the protection of policyholders and pension scheme members.” 

Among other key functions, the Insurance and Pensions Commission (Amendment) Bill empowers IPEC to ensure that compensation is paid to beneficiaries for losses they may incur, and shall determine the level of such compensation, based on the different classes of insurance policies or type of pension or provident fund. 

This particular clause will likely expedite the implementation of a compensation framework to policyholders whose monies were eroded during the conversion of values from Zimbabwe dollar to United States dollars in 2009. 

The Bill necessitates that the Commission shall keep and maintain asset registers for insurers, insurance brokers, pensions and provident funds. 

And now NSSA and medical aid societies and any other persons conducting insurance business will be subject to regulation by IPEC. 

In respect of the Insurance and Provident Fund Bill, the amendments set out the rules to be followed in merging insurance societies, in the transfer of insurance business to another registered insurer, and in the payment of premiums to the registered insurer whenever an insurance broker receives the premiums from policy holders. 

In approving the Bill, Cabinet stressed that in order to guard against insolvency by insurance societies, every registered insurer will now be required to maintain a prescribed level of solvency. It will now be compulsory for insurance societies to submit financial statements within ninety days of each financial year; and the statements must be prepared in accordance with generally accepted accounting practices. 

All insurers will be required to submit to the Commission an actuarial valuation report which must be harmonised with the relevant audit report. 

Additionally, insurers who wish to conduct electronic business must get Commission approval, while the issuance of disability benefits in life policies will be according to clearly spelt out conditions. 

An insurance fund shall not be executable by creditors who are not the policy owners. A registered insurer may not place assets outside Zimbabwe without Commission approval, including on percentages that may be prescribed. In the event of currency change, Cabinet noted that steps must be taken by the registered person, including the actuarial valuation of the insurance business in order to re-calculate the liabilities and assets in line with the new currency. This provision is expected to enhance the protection of policy holders. 

Outlining Cabinet resolutions on the Bill earlier this week, Information and Broadcasting Services Minister Monica Mutsvangwa said: 

“Through the proposed amendments, the Government intends to: strengthen the institutional capacity of the Insurance and Pension Commission and the regulatory framework to create a robust and internationally respected insurance and pension industry regulator; synchronise the main acts that guide the regulation of the insurance and pensions industry; address identified deficiencies in the current legislation; and align insurance and pension legislation to international best practices in order to build a stronger regulatory framework that promotes growth and development of the insurance and pensions industry.” 

The regulator’s increased oversight will ensure that the insurance and pensions sector does not experience a recurrence of the value loss that followed the hyperinflation era of circa 2008. 

Poor regulatory enforcement and demonetisation of the local currency were largely blamed for value erosion by the Justice Smith Commission of Inquiry, which was appointed in 2015 to probe the conversion process. 

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