THE Insurance and Pension Commission (Ipec) will tomorrow host an insurance seminar which seeks to benchmark local capitalisation levels with international standards, the commission has said.
Report by Tarisai Mandizha
The Mordenising Insurance Regulation—Solvency II seminar comes at a time when the sector has been on a growth trajectory following a slump at the height of the country’s unprecedented economic meltdown which ended in 2009.
Solvency II is a framework developed to guide the regulation of insurance in the European Union and its primary concern is the determination of the amount of capital that insurance companies have to hold to reduce the risk of insolvency. Last year Ipec raised minimum capital levels for shortterm insurance players to
$1,5 million from $300 000.
Despite increasing sector-wide minimum capital requirements, some players in the insurance sector contend that the figure remains low.
Ipec risk manager Nhau Chivingira said the decision to consider implementation of Solvency II had come against a background of failure by some insurance entities to honour claims and in some cases resulting in deregistration of some insurers.
Yesterday, the insurance sector regulator ordered SFG Insurance Company to stop writing business with immediate effect after an investigation undertaken by the commission established that the short-term insurance firm was insolvent.
Chivingira said the Solvency II framework was a version that suited the Zimbabwean market and the aim of the seminar was to set the foundation on the way forward with regard to the adoption of the framework, in the event that a decision to adopt the framework has been taken.
“Solvency II reflects new risk management practices to define required capital and manage risk. It is the equivalence of Basel II in banking supervision.The framework has been adopted as a whole or partially by other jurisdictions outside the European Union as international best practice,” Chivingira said.
He said the objectives of implementing the Solvency II or the equivalent was to improve risk management systems, to reduce the losses suffered by policyholders, provide early warning to Ipec, promote confidence in the financial stability of the insurance sector as well as to enable the local insurers to compete internationally.
Close to 200 participants are expected to turn up for the Ipec seminar.