THREE bills set to amend insurance laws in the country are expected to be presented in Parliament before year end, an Insurance Pension Commission (Ipec) executive has said.
By Business reporter
The bills seek to bar shareholders with significant shareholding from holding executive positions in insurance companies and revise individual shareholding threshold among other issues.
Ipec head of Risk, Josphat Kakwere, told stakeholders attending the Insurance Institute of Zimbabwe (IIZ) annual general meeting that the three bills — Insurance and Pension Commission, Insurance and Pension and Provident Fund — were now sitting in the Attorney General’s office before their presentation in Parliament.
The IIZ annual general meeting was successfully held in Victoria Falls from November 8 to 11 under the theme The future vision of insurance: Leveraging our part to prepare for the future.
Kakwere said regulation has been lagging behind developments in the industry resulting in legislative drift.
The amendments are set to enhance policyholder protection under the changing environment.
Kakwere said some observed regulatory concerns are poor corporate governance practices in owner-managed business and insurance entities existing in group structures and conflict of shareholder and policyholder interests.
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He said there were concerns of shareholders who use their insurance companies as cash-cows to fund their non-insurance business ventures at the expense of creating the necessary insurance pools and “siphoning of premiums towards shareholder loans”.
He added that inadequate regulatory capacity resulted in a regulator failing to enforce existing laws, as well as being reactive instead of proactive.
Strengthening supervision and regulation becomes imperative, as well as adapting risk-based supervision, he said.
Regulatory developments are prompted by the need to enhance policyholder protection under the changing environment.
Kakwere said the informalisation of the Zimbabwean economy has made traditional products less relevant.
In addition, insurance entities should, therefore, fulfil their economic goal within the regulatory constraints among other factors.
Kakwere said the harmonisation of regulation within the region will eventually open up the Zimbabwean insurance market under the Sadc’s Financial and Investment Protocol.
Deadline for compliance with investment guidelines and guidelines on the calculation of capital, which among other things define admissible and non-admissible assets, is December 31, 2015 and March 31, 2016 for non-life and life companies respectively.
These guidelines are meant to positively impact on the quality of capital and ability of insurers to match assets and liabilities.
