Technological revolution threat/opportunity to traditional insurance industry. But Ipec ready to provide enabling environment

Technological revolution threat/opportunity to traditional insurance industry. But Ipec ready to provide enabling environment

W Mapfumo

Insurance24

HARARE, The Insurance and Pensions Commission (Ipec) says is ready to engage with the industry in providing an enabling regulatory framework that facilitates ease of doing business through digital transformation of the insurance industry.

Speaking at a Breakfast Presentation on Block-Chain Technology, Blessmore Kazengura, Acting Commissioner of Insurance, Pension and Provident Funds said technological revolution is a threat, as well as an opportunity for the traditional insurance industry.

“The blockchain technology has its potential to significantly reduce transaction costs, enhance products, their delivery processes, financial inclusion and build or break existing business models,” he said.

He said it is, therefore, imperative that the sector stay as relevant as possible for our continued existence and development.

“In fact, we should be first followers of those insurance markets that have become first movers in terms of technological innovation in insurance delivery.

“As a regulator, we are supportive of innovation among our players since it is good for competition and insurance inclusion. As you may be aware, the local insurance penetration, which is around 4.7% is on the low side given the potential impact of digitization in increasing insurance penetration,” he said.

He added that one interesting fact to note is that Bitcoin has overtaken insurance penetration in many African markets.

For instance, in Nigeria, the penetration of Bitcoin is at 3% against insurance’s 1%.

“This is despite the fact that there are no brokers and agents for cryptocurrency and consumer protection laws in place.

“Therefore, the uptake of bitcoin demystifies the perception that there is no market for insurance in Africa and Zimbabwe in particular. Thus, the low penetration of insurance can thus be tackled through digitization,” he said.

Kazengura said the Commission is determined to develop its regulatory capacity in the area of technology saying this is particularly important given the fact that innovation usually precedes regulation; hence the regulatory framework would have to respond to potential new risks and existing supervisory gaps associated with technological change.

He said apart from focus on block chain technology, there are many topical areas of interests that can be discussed for the purposes of developing the industry.

“One such topical issue is the implementation of a Risk-Based Capital Regime, which you may be aware that we have since engaged an actuarial firm to assist us in putting in place the framework,” he said.

He said interactions with fellow regulators revealed that the implementation of a risk-based capital regime in some markets has had a fair of its challenges.

“As such, we should ready ourselves in terms of capacity to implement the risk-based capital regime and overcome any foreseen challenges,” he said.

He said the industry should commence discussions surrounding the implementation of IFRS 17 saying the standard would have to be implemented in a few months from now since 2021 is just around the corner.

“Let us brace ourselves for such changes and be proactive in terms of recommending areas requiring regulatory guidance or improvements for our consideration. Our doors are open for business in line with His Excellency, the President’s mantra “Zimbabwe is open for business.”

He added that another important area requiring continued engagement is the implementation of the Post-Inquiry Reforms.

Following the adoption of the Justice Smith Inquiry’s Report by both Cabinet and Parliament, focus is now on the post-inquiry reforms.

“Let us brace for implementation of the recommendations of the report. he Commission will shortly issue an official communication regarding implementation of the recommendations of the Inquiry’s Report,” he said.