Insurers regulator to de-register errant firms

Insurers regulator to de-register errant firms
Published: 04 July 2017
The Insurance and Pensions Commission (Ipec) is threatening to de-register insurance companies and brokers that are failing to meet client claims on time in the wake of a worsening economic situation, the businessdaily can report.

With the operating environment buckling to a serious liquidity crisis occasioned by the cathartic company closures, and soaring unemployment, the insurance industry is also feeling the heat.

A number of insurance firms and brokers are struggling to honour their claims, courting the ire of Ipec, which regulates insurance and pensions business in Zimbabwe.

Tendai Karonga, Ipec's commissioner, on Saturday said the regulator was looking into all players that are failing to deliver on their claims promises on time, with stiff penalties in the pipeline.

"An insurance company or insurance agent/broker worth his/her salt, does not mislead potential insurance customers by over-promising what a specific policy covers or what they stand to benefit," said Karonga.

"The commission frowns upon insurance companies or insurance agents/brokers who deceive unsuspecting potential insurance customers all in the name of making money at the expense of policy holders," he said at the Insurance Day commemorations in the capital.

Last year alone, Ipec struck a number of insurance firms off the register, chiefly for failing to meet minimum capital requirements. These included New Reinsurance Company of Harare (Private) Limited, Global Insurance Brokers, KMFS, Excellence Insurance and Heritage Insurance.

Since the adoption of the multi-currency regime in February 2009, a number of insurance firms have also found the going too tough. Those that have collapsed since Zimbabwe ditched its local unit due to hyperinflation, include the Agricultural Insurance Company, Altfin, Jupiter Insurance, SFG Insurance Company and Suremed Health Insurance Company.

At the weekend, the commissioner said it was the duty of insurers, their agents or brokers to educate existing or potential policyholders about insurance products that are on offer by explaining both the benefits and disadvantages of such policies.

"That way, the insurance consumer will be able to make an informed decision based on truthful information that they would have been given," he said.

This comes as Karonga recently said the commission was moving to compel all insurance companies into publishing financial statements as part of strategies to promote transparency and increase credibility in the sector.

He said insurance fraud - estimated to gobble around 30 percent of premium funds annually - had necessitated the measure, anticipated to be effective by end of March next year.

Presently, only listed insures publish their financials, with the rest reporting exclusively to Ipec.

"The commission, through proposed amendments to the Insurance Act, will require that all insurance companies publish their financial statements, regardless of whether they are listed on the stock exchange.

"This will help in instilling market discipline since stakeholders will now be more informed and will therefore punish insurers whose financial statements will not be depicting a good standing," Karonga said recently.

As part of measures to curb insurance fraud and maintain corporate governance in the sector, Karonga also said the regulator was going to start vetting office bearers.

"The commission has come up with fit and proper assessment criteria to vet all proposed office bearers for key positions within an insurance company. This criterion will be looking at qualifications, experience as well as integrity of the proposed appointees," he said.

He noted that insurance companies needed to borrow a leaf from colleagues in the banking industry by crafting comprehensive risk management systems.

" . . . This will enable a detailed analysis of the risk management situation in the annual financials which are then used by different stakeholders," he said.

Ipec is a result of the enactment of the Insurance and Pensions Commission Act (Chapter 24:21).

Its functions of Ipec in terms of Section 4(1) of the Act include that of registering insurers, mutual insurance societies and insurance brokers in terms of the Insurance Act (Chapter 24:07) and, subject to that Act, to regulate and monitor their business.

The commission is also mandated to register pension and provident funds in terms of the Act and, subject to that Act, to regulate and monitor their management and administration.

It also exists to monitor the activities of insurers, mutual insurance societies, insurance brokers and pension and provident funds to ensure that they maintain set standards and ensure compliance with the Act and the Pension and Provident Funds Act (Chapter 24:09), as the case may be.

Its other functions include providing information to the public on matters relating to insurance and pension and provident funds and to encourage and promote insurance and investment in such funds; to advise the minister of Finance on matters relating to insurance and pension and provident funds; and to perform any other function that may be conferred or imposed on Ipec in terms of the law or any other enactment.
- dailynews
Tags: Karonga, Ipec,

Comments

Latest News

Latest Published Reports

Latest jobs