SUMMARY OF KEY AMENDMENTS INTRODUCED BY THE INSURANCE AND PENSIONS COMMISSION AMENDMENT BILL, 2024

Summary

The Insurance and Pensions Commission (IPEC) Amendment Bill, 2024, introduces significant reforms that will reshape Zimbabwe’s insurance, pensions, and medical health sectors. Notably, the Bill expands IPEC’s regulatory powers to include medical aid societies for the first time, ensuring these entities are subject to the same regulatory oversight as insurers and pension funds. In addition, IPEC is granted the authority to approve service providers such as actuaries, asset managers, and credit rating agencies operating within these sectors, enhancing accountability and operational standards. A major provision in the Bill mandates the maintenance of asset registers for all regulated entities, including insurers, medical aid societies, and pension funds. These entities will now be required to notify IPEC 14 days in advance before disposing of any asset listed in the register. These changes, along with the establishment of a Policyholder and Pensions and Provident Fund Members Protection Fund, reflect a stronger focus on governance, consumer protection, and the overall stability of the sector. As the regulatory landscape evolves, all those operating in the insurance, pensions, and medical health sectors  must appreciate the far-reaching implications of the changes proposed in the Bill.

 

Introduction

The Insurance and Pensions Commission (IPEC) plays a pivotal role in overseeing the insurance and pensions sectors in Zimbabwe, ensuring that these industries are aligned with global best practices. As the regulatory landscape evolves globally and domestically, it is essential for IPEC to stay aligned with emerging trends and best practices. In this context, understanding the Insurance and Pensions Commission Amendment Bill, 2024 is crucial for ensuring compliance with the new regulatory framework.

The Insurance and Pensions Commission (IPEC) Amendment Bill, 2024, gazetted on December 20, 2024, proposes significant amendments to the Insurance and Pensions Commission Act [Chapter 24:21]. These changes aim to strengthen the regulatory framework overseeing Zimbabwe’s insurance and pensions sectors. The amendments have far-reaching implications for insurers, pension funds, asset managers, and medical aid societies, which will now fall under IPEC’s regulatory scope. Below is an overview of the key changes:

  1. Expanded Definitions (Section 2)
  • New definitions for terms such as “asset,” “associate,” and “closely related” clarify ownership and relationship structures in the sector.
  • The definition of “control and controlling stake” is refined, specifying thresholds (e.g., 10% ownership or voting rights) for control over an entity’s management and decision-making;
  1. a) holding of issued shares or financial instruments (such as compulsory convertible debentures) of at least 10% of total issued shares or debentures in a registered entity or its ultimate beneficial owner; or

(b) voting rights attached to the aforementioned shares i.e. at least 10% of issued shares or financial instruments; or

(c) power to appoint directors to the board and other executive committees or remove them.

 

  1. Enhanced Powers for IPEC (Sections 3 & 4)
  • IPEC’s regulatory powers are expanded to include medical aid societies for the first time, along with insurers, pension funds, and other related entities;

“(a) to register insurers, mutual insurance societies, insurance brokers, medical aid societies and pension and provident funds to ensure that they maintain set standards and ensure compliance with the Insurance Act [Chapter 24:07] and the Pensions and Provident Funds Act [Chapter 24:32], as the case may be;

  • IPEC is given authority to approve service providers (e.g., actuaries, asset managers, credit rating agencies) to operate within the insurance and pensions sectors;

to approve for the purposes of continuing or commencing operations in the insurance and pensions sector, actuaries, asset managers, credit rating agencies and other service providers;

  • IPEC gains stronger enforcement powers to investigate and enforce compliance, including tougher mechanisms for addressing contraventions of sector laws.
  1. Governance Reforms for IPEC (Sections 5, 6, 7, 13, 14, 15, 23)
  • The composition and qualifications of the IPEC Board are revised. The number of directors is increased to between 7 to 9 members, with a stronger emphasis on experience in fields such as actuarial science, law, and finance.
  • Directors will now be subject to stricter conflict of interest provisions, with disqualifications introduced for individuals with ties to regulated entities or conflicting interests.
  • Term limits for directors are clarified, allowing a maximum of two consecutive four-year terms.
  • The IPEC Board will be required to establish key committees, including audit, risk management, and remuneration committees, to ensure effective governance and oversight.
  • The amendments to section 23 introduce stricter penalties for non-compliance with information requests by the IPC. Entities failing to provide requested data could face fines or imprisonment.
  1. International Cooperation (New Part IIA, Section 23)

Part IIA focuses on cooperation by IPEC with other authorities, allowing IPEC to foster relationships with foreign supervisory and law enforcement authorities. This includes sharing information, conducting investigations, and harmonizing laws and procedures to strengthen cross-border regulation of the insurance and pensions sectors. IPEC is empowered to share privileged information with international authorities, provided confidentiality is maintained.

 

  1. Policyholder and Pensions and Provident Fund Members Protection Fund (Part IIB, Section 23)
  • A new Policyholder and Pensions and Provident Fund Members Protection Fund is established to compensate policyholders and fund members in cases of insolvency by an insurer or pension fund;

The object of the Fund shall be to—

(a) compensate policyholders and pension, provident or retirement annuity fund members in accordance with this Act for losses directly incurred by them in the event of a contributor becoming insolvent;

(b) payout unclaimed benefits to the rightful owners whenever a claim is made.

  • Financing for the Fund will come from contributions from insurers and pension funds, as well as income from investments, unclaimed benefits, and other sources such as penalties and donations.
  • New Fund Board. A new Board will manage the Fund, with members from key industry stakeholders, including insurers, pension fund representatives, and the Insurance and Pensions Commission.
  • Compensation Mechanism: The Fund will compensate beneficiaries (policyholders, pensioners, or fund members) who incur losses due to the insolvency of a contributor. Compensation will depend on the type of insurance or pension policy and may be adjusted based on any payments already made by the contributor’s liquidator or insurer.
  1. Amendment of Part V (General)
  • Indemnity of members and employees of the Commission – The Bill introduces a new section 32A which provides for the indemnification of the members of the Board of IPEC, the Commissioner, employees and inspectors engaged by IPEC against personal liability that may arise from loss or damage caused by them carrying out their duties under the Act or any regulations, unless that loss or damage is caused by the person’s negligence or intent.
  • Keeping of Asset Register – There is introduction of section 32B which mandates IPEC to keep an asset register for insurers, insurance brokers, medical aid societies, pensions and provident funds and any other regulated entity. All these entities will be required to give IPEC 14 days’ notice before disposing of any asset recorded in the register.
  • IPEC is given powers to order the stay of the disposal of any such property if it is of the opinion that the disposal is contrary to public policy.

(1) The Commission shall keep and maintain asset registers for insurers, insurance brokers, medical aid societies, pensions and provident funds or of any other regulated entity, which the Commission may deem necessary.

(2) No insurer, insurance broker, medical aid society, pension and provident fund, shall dispose of any asset that is recorded in the Commission’s register without giving fourteen days’ prior written notice to the Commission and upon the expiry of the notice period shall proceed to dispose the asset.

(3) The notice referred to in subsection (2) shall be accompanied with an independent valuation report and reasons for the disposal.

  • Contravention of this section by any entity is an offence.
  1. Appeals Process (Section 32)
  • A new appeals process (Section 32C) is introduced, allowing individuals dissatisfied with IPEC’s decisions to appeal within 14 days to the Minister.

In conclusion, the Insurance and Pensions Commission Amendment Bill, 2024 introduces critical reforms that will significantly reshape Zimbabwe’s insurance, pensions, and medical health sectors. For the first time, IPEC’s regulatory powers are expanded to include the oversight of medical aid societies, ensuring a more comprehensive regulatory framework. The Bill also mandates the maintenance of asset registers for all regulated entities, including insurers, pension funds, and medical aid societies, with a requirement to notify IPEC 14 days before disposing of any assets. These creation of a Policyholder and Pensions and Provident Fund Members Protection Fund, reflect a strong focus on consumer protection. The introduction of an appeals mechanism further strengthens transparency and accountability, providing a safeguard for those who may feel aggrieved by IPEC’s decisions. As the regulatory landscape evolves, all those operating in the insurance, pensions, and medical health sectors  must appreciate the far-reaching implications of the changes proposed in the Bill.

Nobert Musa Phiri

Partner: Muvingi & Mugadza Legal Practitioners Harare, Zimbabwe

[email protected]