THE Insurance and Pensions Commission (Ipec) said it is confident that 95% of the insurance companies will comply with the $3 million minimum capital requirements within the stipulated deadline, set for month end.
REPORT BY GAMMA MUDARIKIRI
Ipec’s head of prudential supervision, Pupurai Togarepi, told Southern Eye Business yesterday that most of the insurance companies had already complied with the minimum capital requirements and the remainder were expected to do so by the end of this month.
“We are confident that between 95% and 98% of the insurance companies will have complied with the minimum capital requirements by the June 30 deadline,” he said.
“A majority of the companies has already surpassed that threshold.”
Ipec last year increased the minimum capital threshold for insurance companies to a maximum of $3 million from $300 000.
The minimum capital requirements for reinsurance companies were raised to $3 million up from $400 000, while the same requirements for short-term insurance firms were hiked to $2 million.
Funeral assurers minimum capital requirements were increased to $3 million from $500 000.
Insurance companies were to have complied with at least half of the requirements by the end of last year, with the final deadline being six months later.
Togarepi said the regulator was still anticipating mergers and acquisitions in the insurance sector for companies that were still to comply with requirements.
He said the regulator will come up with measures to deal with players who would have failed to comply with the requirements within the stipulated time frame.
The Zimbabwe insurance sector currently has 26 companies in short-term insurance fighting for a market estimated at around $180 million.
Ipec officials are on record saying players were too many, whereas business was very low as reflected by low technical rates such as insurance rates, insurance density and insurance penetration.
The new capital requirements are expected to trim down the number of players and strengthen the sector and enable it to finance their physical operational infrastructure such as branches and ICT systems and provide the risk capital to enable players to underwrite more business.
Last year Ipec proposed mandatory publication of financial statements by all insurance companies, a development the regulator said would enhance transparency and accountability in the sector.
The regulator was blaming players for limited disclosure on core financial statements and notes, saying this compromised transparency.
Togarepi, however, said he was anticipating a boom in the insurance business especially after the election, as players were currently adopting a waiting-and-see attitude because of uncertainties surrounding the coming polls.