Nobert Musa Phiri: Partner Muvingi and Mugadza Legal Practitioners

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The Insurance regulator in Zimbabwe, Insurance and Pensions Commission (IPEC) in June 2017 introduced a micro-insurance framework whose primary objective is to promote the development of micro-insurance in Zimbabwe by establishing a basis for the regulation and supervision of micro-insurance activities and protection.  The regulations sought to ensure inclusion of low-income earners in the insurance industry. A ‘new’ chapter in 2018 has seen the first attempt to formally regulate Micro-insurance by introducing laws which register micro-insurance business.

 While it is commendable that steps have been taken to formally recognize micro-insurance business, it is questionable whether the current regulatory framework adequately addresses the challenges associated with micro-insurance. Regulation should ensure that micro-insurance contracts are concluded fairly in an environment where consumers can expect greater transparency and equity in their dealings with service providers.However one should not over look micro-insurance from a cost-benefit perspective, that the regulation of micro-insurance should neither lead to prohibitive compliance costs for insurance providers, nor add to the total costs of insurance for consumers.

In June of 2017 the Insurance Regulator in Zimbabwe, the Insurance and Pensions Commission (IPEC) launched a micro-insurance regulatory guideline that facilitates provision of insurance to low income earners. The justification for micro-insurance according to the regulator is for financial inclusion given that it extends the range of financial products to low income earners. In order to formalize the operation of micro-insurance business, in March of 2018 the Minister of Finance and Economic Development moved to regulate the micro-insurance industry by gazzetting Statutory Instrument 39 of 2018, Insurance (Amendment) Regulations, 2018 (No.21) and Statutory Instrument 40 of 2018; Insurance and Pensions Commission (Levy) Regulations, 2018 (No.1). While it is prudent to formally regulate micro-insurance business, it is interesting to note that the Regulatory framework that has been promulgated essentially deals with capital requirements and administrative issues relating to registration and levies.

Micro-insurance products primarily target low-income earners and are designed in line with traditionally accepted insurance principles. However it must be noted that since micro-insurance covers those members of the public most vulnerable to risk, consumer protection is essential. Effective consumer protection is thus crucial in ensuring that insurance remains a sustainable risk protection mechanism. The growth of the micro-insurance sector must then be accompanied by the progression of the laws governing micro-insurance to ensure effective consumer of micro-insurance.

The Micro-insurance Regulatory Framework

Insurance business in Zimbabwe is principally regulated through the Insurance Act[1], Insurance and Pensions Act[2], the Pensions and Provident Act[3] and the various regulations gazzetted by the Minister. The principal regulations dealing with the administration of Insurance business are, the Insurance Regulations 1989 Statutory Instrument 49 of 1989. Subsequent regulations and in particular Statutory Instrument 95 of 2017, Insurance (Amendment) Regulations 2017 (No 19), which deals with capital requirements and calculation of capital for insurers is important in appreciating the micro-insurance framework. It is against this regulatory background that Statutory Instrument 39 and 40 dealing with micro-insurance were promulgated. The regulatory framework on micro-insurance paysattention to administrative functions relating to capital requirements and registration of micro-insurers.

Statutory Instrument 39 of 2018 

The Statutory instrument amends Section 3 (1)[4] of the Insurance Regulations that sets out the minimum capital requirements for insurers. This was through the insertion of Section 3 (1)(f)[5] which stipulates that three hundred thousand United States dollars shall be the minimum capital requirement for micro-insurance company. Such a provision is meant to ensure liquidity and solvency in micro-insurance companies.

Further, the Statutory Instrument amends the Third Schedule of the Regulations in Part 1 by inserting paragraph 8 which outlines the Registration fee for micro-insurance companies.[6] There is an application fee of $200.00 and the Registration fee of $1000.00 to be paid for registration of a micro-insurance entities. Part III[7] was amended to include the licensing fee for micro-insurance agents. These could be individuals or corporate agents. This ensures that agents/brokers operating in micro-insurance are licensed to operate and regulated by the Insurance Commissioner. The fees for registration of an individual agent are set at US$20 and US$50 for a corporate agent

Statutory Instrument 40 Of 2018

This Statutory instrument amends the Insurance and pensions Commission (Levy) Regulations, 2016. It amends Section 3[8] of the Insurance & Pensions Commission (Levy) Regulations by inserting paragraph (m)[9]. It stipulates the calculation of levy to be paid in respect to micro-insurance firms. This is important as Zimbabwe has taken steps to ensure the effective regulation of micro-insurance by recognising its existence as a viable insurance market. 

The regulations are passive in their regulation of micro-insurance and offer a very relaxed approach to regulation. Seeking to regulate the micro-insurance through by dealing with capital requirements and registration is under stating and  failing to appreciate the impact of micro-insurance business.Regulation of micro-insurance should fundamentally adopt an enabling framework which ensures market stability and provides for consumer protection[10]. Regulation should ensure there is definition of micro-insurance, the insurable interest, the basis risk, and specific requirements such as no cancellation, technical provisions requirements, product approval processes, reporting, capital requirements, ongoing supervision, privacy and data protection and consumer protection

The legal framework regulating micro-insurance is in need of further reform. The consumer of Insurance products is not an ordinary consumer and they buy a product that remains difficult to understand.However, any regulations on micro-insurance should always be guided by the desire to balance the interests of the insurer and the insured. Reform should present a balance, and never lead to over regulation of the Insurance industry on one hand and over protection of the insurance consumers on the other.


[1] Chapter 24:07

[2] Chapter 24:21

[3] Chapter 24:09

[4] Insurance Regulations, 1989

[5] Statutory Instrument 39/2018

[6] Ibid

[7]  Part III (n 73 above)

[8] Insurance and Pensions Commission (Levy) Regulations, 2016

[9] Statutory Instrument 40/2018

[10] Regulatory and Supervisory Challenges of Index based Insurance, Haykel B Sghaier: The State of Microinsurance  the Insider’s Guide to understanding the Sector :Issue Number 3 -2017 Micoinsurance Network’s Annual Journal page 58

[11] Ibid