Capital levels should be directly related to level of risk: ICZ
By Insurance24
HARARE, Insurance industry is expecting an improved outcome in 2018 on the back of the new political and economic order but says a risk based approach regarding regulatory capital should be in place.
The Insurance sector had been affected by economic hardships which have affected payments of claims while on the other hand some of the insurers have been struggling to meet the required capital thresholds.
The minimum capital requirement for short-term insurance will be raised from $1, 5 million and US$2, 5 million for life insurers.
Insurance council of Zimbabwe (ICZ) told Insurance24 in emailed responses that capitalization levels should be directly related to the level of risk an insurance company takes on its books.
“The industry has always advocated for a risk based approach with regards to regulatory capital. Insurance claims essentially should be settled from the insurance funds with shareholder funds providing a buffer should these be insufficient. It follows therefore that capitalization levels should be directly related to the level of risk an insurance company takes on its books,” said ICZ.
ICZ added that the efficacy of was being threatened by deteriorating economic environment which was making indemnifying policyholders for claims a difficult position.
“The industry expects a better outcome in 2018 on the back of a new political and economic order. The very efficacy of insurance was being threatened by a deteriorating economic environment which was making indemnifying policyholders for claims a difficult proposition. Value preservation had also become an issue due to inflationary pressures.
While there is little expectation of exponential growth due to the upcoming elections it is expected that there will be better stability,” noted ICZ.
ICZ also pointed that inline other challenges , ICZ was working on enhancing ICTs in order to close loopholes for fraudulent activities, improving the liquidity of the market through eliminating credit for insurance products and increasing public awareness of insurance products.
The Council is also supporting players through technical assistance in terms of viable pricing, promoting the interests of the industry through engaging stakeholders like the regulator and the insurance public and increasing public awareness with regards to insurance ICZ is a voluntary organization that is set up to promote the interests of its members which are non-life insurance and reinsurance companies.
The regulation of players itself is done by the Insurance and Pensions Commission
