THE Insurance and Pensions Commission (Ipec) is revamping corporate governance practices in the industry to ensure proper claims settlement and benefit payments, key ingredients in building confidence in the sector.
BY MTHANDAZO NYONI
Ipec commissioner of insurance, pension and provident funds, Tendai Karonga, told NewsDay that they were in the process of revamping corporate governance practices in the sector following abuse by some companies.
“The key corporate governance issues include the need to improve on record-keeping, reduction of administration expenses, enhanced disclosure and improvements in internal controls, among others,” Karonga said.
The industry is facing a plethora of challenges such as low public confidence following the loss of values during the hyperinflationary era, delays by some insurers to settle claims within reasonable timelines, higher claims repudiation levels, poor corporate governance, insurance fraud, liquidity challenges, high levels of premium debtors and complex policy wording.
Currently, insurance penetration ratio in Zimbabwe is 3,6%, which is below Ipec’s expectations.
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“As such, the Insurance and Pensions Commission is implementing a number of measures with a view to reducing both the supply-side and demand-side barriers to insurance inclusion in line with the Government National Financial Inclusion Strategy,” he said.
“On the supply side, we have put in place a micro-insurance framework that will facilitate the accessibility and affordability of insurance cover to low income earners and also the informal sector, who have been excluded in the past.”
Karonga said the growing informalisation presented an opportunity for insurance companies to offer micro insurance products in order to tap into the informal sector, thus inevitably increasing the insurance penetration ratio.
“Some of the characteristics of the micro insurance framework are that it provides for less stringent registration requirements for insurers who offer micro insurance products, as well as promoting affordability and simplicity of insurance products, whilst also providing firm guidelines on best practice,” he said.
Karonga said Ipec has scaled up on the number of on-site inspections, targeting systemically important institutions in the industry in order to assess the levels of compliance to relevant legislation and regulatory frameworks.
“This will ensure that the insurance players remain fit and proper to conduct business, at the same time meeting the reasonable expectations of policyholders,” he said.
The commission is also in the process of reviewing its primary legislation, among them, the Insurance Act to align it with international best practices, particularly the core principles promulgated by the International Association of Insurance Supervisors, Karonga said.
“The ultimate objective is to develop an effective supervisory system that facilitates market development, consumer protection and improvements in benefit entitlements,” he said.