Comply with revised minimum prescribed asset thresholds- Mthuli Ncube
Noah Kupeta
HARARE, Finance and Economic Development minister Professor Mthuli Ncube has said most insurance players remain non-compliant with the revised minimum prescribed asset thresholds as at 30 September 2019 following the review of the minimum prescribed asset thresholds.
In his 2019 National Budget Statement, Professor Mthuli Ncube urged insurance and pension businesses to ensure adherence to their compliance plans to promote accountability and transparency for the good of policy holders and beneficiaries.
He disclosed that Pension Funds Minimum prescribed asset threshold stands at 20 per cent while compliance as at 31 March was 7.32 per cent. Pension Funds compliance as at 30 June 2019 stands at 7.25 per cent recording a 5.64 per cent as at September 2019.
As for Life Assurance, their minimum prescribed asset threshold was 15 per cent while compliance as at 31 March was 13.70 per cent while compliance as at 30 June 2019 stands at 7.25 per cent recording a 13.62 per cent further recording 5.74 per cent as at September 2019.
Short Term Reinsurers, Funeral Assurance and Composite Re-insurance are the worst performers who recorded 1.30, 0.12 and 1.80 per cent respectively.
This explains that in terms of compliance with the law, the insurance companies need to up their game.
Accordingly, government will relook at the amendments of various pieces of legislation pertaining to the financial sector with the objective of strengthening the supervision and regulation of financial sector entities, curb speculative tendencies and also align to international best practice.
In this regard, Professor Mthuli Ncube said amendments to the IPEC Act, Insurance Act, Pension and Provident Funds Act, Money Laundering and Proceeds of Crime Act, Banking Act and Deposit Protection Corporation Act are at various stages of processing.
He has also thus proposed a review of minimum capital requirements with immediate effect. Short Term insurance will increase from 2.5 million to 37.5 million Zimbabwean dollars.
Life assurance was proposed to increase from 5 million to 75 million minimum capital requirements while Funeral assurance shall increase from 2.5 million to 37.5 million Zimbabwean dollars.
As for Re-Insurance, they will increase from 5 million to 75 million while Micro-Insurance will also increase from 0.3million to 4.5 million Zimbabwean dollars.
The proposals coincides with the Insurance and Pension Commission (IPEC) which has since been tasked to develop a risk-based capital framework, the Zimbabwe Integrated Capital and Risk Project (ZICARP), which will be launched in 2020.
The proposals are also sympathetic to policy holders and pension funds.
“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.
“It is 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,” said Professor Mthuli Ncube.
Professor Mthuli Ncube highlighted increased capacity production is the main thrust of any meaningful production.
He emphasised that insurance business need to self-introspect by adhering to strong corporate governance and accountability.
