Insurance sector minimum capital requirements reviewed upwards
Staff Writer
HARARE, FINANCE minister Mthuli Ncube has reviewed minimum capital requirements for the insurance sector, indicating that this was necessitated by the obtaining macro-economic environment.
Mthuli made the adjustments in his 2020 national budget, under the theme Gearing for Higher Productivity, Growth and Job Creation. However, this will see most players having to comply with over 1400% increments with immediate effect.
The move comes as most insurance companies are struggling to comply with other requirements such as the prescribed assets ratio.
Short term insurers minimum capital requirements have been reviewed upwards to ZW35, 5 million from the current ZW$2,5 while life will have to meet requirement of ZW$ 75 million from the current ZW$ 5 million.
Funeral assurers capital requirements have been reviewed to ZW $37,5 million from ZW2,5 million while Re-insurance requirements now stands at ZW$ 75 from the current ZW $5 million. Micro-insurance have been reviewed to ZW$ 4,5 million from ZW $0,3 million.
“The obtaining macro-economic environment have necessitated upward review of minimum capital requirements for different players in the insurance industry to ensure that entities are well capitalized for the protection of value for policy holders and pension members,” he said.
Meanwhile, IPEC is developing a risk-based capital framework, the Zimbabwe Integrated Capital and Risk Project (ZICARP), which will be launched in 2020.
He said it is recommended that the pension preservation amount be reviewed from the current ZWL$600 to ZWL$6,000 in order to ensure that the amount preserved is decent enough to warrant payment of a deferred pension at retirement, after meeting preservation expenses.
He further proposed that the minimum commutable pension be reviewed from ZWL$50 to ZWL$500 per month, in line with inflation developments in the economy.
Pursuant to the Transitional Stabilization Programme objective of enhancing agricultural insurance, and in line with the National Financial Inclusion Strategy, IPEC is developing a regulatory framework for weather indexed insurance products.
“It is envisaged that the framework will enhance regulation of weather Index-based insurance products in order to build resilience and ensure policy holder protection in the agricultural sector,” he said.
