Funeral Assurers pleads for review of minimum regulatory capital
HARARE, THE Zimbabwe Association of Funeral Assurers (ZAFA) has pleaded with the sector’s regulator IPEC for a review of the sectors minimum capital requirement which it said was higher than fellow insurers who trade in more than one product.
Solomon Chikanda, the ZAFA president, told stakeholders at a breakfast meeting, that currently, Funeral Assurers capital requirement is at $62,5 million, which is higher than fellow insures.
“Our counterparts in the short term insurance sector who write a dozen types of insurance unlike us who trade in one product are currently pegged at minimum capital less than us at $37,5 million,” he said.
He added that the sector prays that in future, the minimum regulatory capital be much less than short-term counter-parts.
Chikanda noted that compliance with prescribed assets status is an area that the sector is struggling with unintentionally.
“As an industry we are seized with the matter but the compliance levels appear to be rather too high for our sector which realizes considerable low gross premium written levels,” he said.
This comes as IPEC Commissioner Grace Muradzikwa, at the meeting indicated that as at September 30, 2020, only 3 out of 18 funeral assurers were compliant with the minimum regulatory capital.
But Chikanda, further noted that ZAFA members have invested in service provision in preparation of funeral claims in the form of mostly land and buildings, hearses, gravesides among other leaving the sector less liquid to contribute to prescribed assets.
Chikanda said the Finance Minister’s 2021 budget gave a reprieve to the insurance sector involving the Funeral assurance sector by holding in abeyance increases in minimum regulatory capital which have been involved on most previous budgets.
“In our view this will give the much-needed relief to adjust our balance sheets to match the requirements of the newly launched Zimbabwe Integrated Capital and Solvency Program (ZICARP),” he said.
Chikanda also hoped that once the Insurance Bill is gazetted, it will make the operations of the insurance industry more effective.
Statutory Instrument 95 of 2017 (investments in cash and other liquid assets), awards 100 percent credit to non-value preserving assets particularly cash and other liquid assets.
Chikanda said the sector believes this is an anomaly given the long term nature of liabilities more so given the current hyperinflationary environment. “We pray that your team takes a relook on this issue,” he pleaded to Ipec.
Meanwhile, Muradzikwa said compliance to minimum regulatory capital was an industry wide challenge, which the Commission is seized with going into 2021.