Insurance companies will soon be required to top up their minimum capital thresholds by between 66 and 150 percent as the Insurance and Pension Commission (IPEC) moves to enforce the new minimum capital requirements that were announced by Finance Minister Patrick Chinamasa in the 2016 National budget statement. Minister Chinamasa proposed to increase minimum capital requirements for short-term insurers and funeral assurers from $1,5 million to 2,5 million and life assurers from $2 million to $5 million.
The industry is supposed to have met the new requirements by December 31 this year. Speaking on the sidelines of the 2016 Insurance Institute of Zimbabwe graduation ceremony on Friday last week IPEC commissioner Mrs Marnet Mpofu said they were currently drafting a Statutory Instrument to enforce the new minimum capital requirement.
“The Statutory Instrument will be released anytime soon. The industry is aware of the new minimum capital requirements and some companies have been working towards meeting the new capital requirements,” she said. She added that they were also aware that not all companies will be able to meet the new minimum capital requirements by the end of the year.
“We know that not all companies will meet this requirement by year-end so we are going to be lenient to those companies that would have not met the requirements but whose minimum capital is close to the new thresholds because we do not want to stifle them.
“This will, however, have to be approved by the Ministry of Finance which we are engaging at the moment,” she said.
The upward review of the minimum capital requirements for the insurance sector is expected to improve underwriting capacity and contain insurance business within the country.
The move comes as four companies have already been de-registered so far this year for failing to meet minimum capital requirements and failing to pay claims. The four are New Reinsurance, Global insurance, KMFS and Navistar.
Meanwhile at least 185 students graduated during the 2016 IIZ graduation ceremony. Of these 167 students received certificates of proficiency, 10 students received diplomas and eight were awarded associateship diplomas.
Guest of honour Dr Ellias Ngalande from Malawi challenged the graduates to be innovative and to think outside the box since there was a need to come up with insurance packages that address Africa’s risk.
“The time for Africa is now as we face the daunting challenges from natural disasters brought about by climate change. The challenge for you ladies and gentlemen is to join the evolution and redesign insurance specifically for African risks. Now that you have been equipped, through your professional training, it is time you stepped up to the plate and re-engineer insurance for the African economic agent and the African context. This is one challenge.
“Another challenge is that insurance is a service that only becomes appreciated at one’s worst moment, namely when calamity has struck. It is, if you like, a service more akin to what a spare wheel does: being carried around in the good times, in preparation for the yet unknown bad time!
“Because of this, clients often judge the value of insurance harshly because at the onset of that risk, they want some unambiguous speedy relief. Such, are the moments when most of us tend to be most unreasonable and condemn a whole industry based on a particular event. I hope you have been fully equipped to handle this challenge as well,” he said.
IIZ president Dr Edward Gomba said the institute is working tirelessly towards revamping its qualifications in a bid to match international standards, compete if not surpass the market leaders in Insurance as well as extend its territory in Africa.
“This has seen the commencement of the development of a new curriculum which is now at its advanced stage. Students on the current curriculum are therefore encouraged to finish their studies by 2017 so that they start on a new page when the new curriculum is introduced. The new curriculum has been developed to attract more local and regional takers in order to continuously grow the IIZ brand and maintain relevancy,” he said.