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Tinashe Makichi in Bulawayo
The Insurance and Pension Commission has raised a red flag over continued minimal participation by funeral assurance companies in funding the economy’s strategic projects.

The funeral assurance industry’s current prescribed asset ratio is slightly above 1 percent, which is well below the required prescribed assets ratio of 7,5 percent.

The Finance and Economic Development Ministry is concerned by this disparity, which is indicative of the slow traction at which funeral assurance companies have been supporting economic projects.

IPEC commissioner Tendai Karonga told delegates attending the Funeral Assurance and Services Conference in Bulawayo that it is of great concern to both IPEC and the Ministry that the funeral assurance sector is non-compliant with the required minimum prescribed asset ratio of 7,5 percent.

“By implication, your sector is lagging behind in terms of contributing to the economy’s strategic projects.

“Your duty is not only to employ people and offer dignified funeral services but to take part in developmental aspects of the economy, like what other insurance sub-sectors are doing,” said Mr Karonga.

As at March 31, 2017, level of prescribed asset investments by funeral assurers was only around $480 000, with some companies having not contributed anything to date.

“IPEC takes great exception to this and continues to urge funeral assurance industry players to comply with the 7,5 percent prescribed asset ratio.

“IPEC expects Zimbabwe Association for Funeral Assurers to present a plan on how the industry intends to deal with this deficit,” said Mr Karonga.

He said there is also a plan to increase the current minimum capital requirements for funeral companies — a move the Commissioner regarded as a way to go in minimising risk and increasing cash base in case of claims.

The current minimum capital requirement for funeral assurers, as guided by Statutory Instrument 21 of 2013, is $1, 5 million while the revised minimum capital requirement for funeral assurers will be $2, 5 million once the new Statutory Instrument is published. As at March 31, 2017, Mr Karonga pointed out three funeral assurers as having capitalisation levels below the minimum capital requirement of $1,5 million.

He said funeral assurers failing to meet the minimum capital requirements should explore the possibility of merging so that they become stronger.