Low disposable income has been a major setback to the insurance and pension sector this year and players in the industry should come up with innovative and affordable products to stimulate activity, the Insurance and Pensions Commissions (IPEC) said.
IPEC commissioner Mannet Mpofu said during the course of the year the insurance sector recorded increased business, but there was still room for people to purchase insurance products.
“There was some increase in the insurance business written,” said Mpofu.
“Insurance companies need to step up their marketing of insurance products that are tailored to meet the needs of their clients.”
Most employees earn way below poverty datum line of $500 and have thus found insurance not a priority.
Mpofu said the commission would next year publish the number of insurance companies operating in the country.
At the moment the bulk of the premium income of the sector is controlled by five major companies.
The penetration rate for the sector is at 3%, which is half of the 6% when the insurance sector was at its peak.
In 2011, several companies failed to raise statutory minimum requirements of $300 000 for short-term and non-life insurers, $400 000 for reinsurance and funeral assurers. Life assurers were required to have a minimum capital of $500 000.
This year, the commission deregistered 1 100 pension funds that failed to comply with Section 10 and 11 of the Pension and Provident Funds Act.
Section 10 noted that a registered fund may be dissolved in accordance with provisions of the rules of the fund and shall be dissolved where so directed by the Registrar in terms of Section 19.
Section 19 states: “If, after examining any return or report in terms of this Act in respect of a registered fund, the Registrar is of the opinion that the fund is not in a sound financial condition and a satisfactory scheme for bringing the fund into a financially sound condition within a reasonable time has not been submitted to him.”