Story by Stanley James, Business Editor
HARARE – THE government has gazetted new United States Dollar capital levels for Zimbabwe’s insurance companies in a move aimed at improving the soundness of the industry.
The capital levels revealed in a Statutory Instrument issued by the government this Tuesday are among other factors expected to facilitate strong and viable insurance entities.
Insurance and Pensions Commission (IPEC) Commissioner, Dr Grace Muradzikwa, confirmed that the latest developments will further maintain the ability of the firms to pay out insurance claims.
“As IPEC, our mandate is to protect the interests of policyholders and pension scheme members. The United States Dollar indexed capital thresholds are a step in that direction where the new minimum capital requirements for life companies are pegged at US$2 million, Funeral Assurers, US$500 000, Short term insurers, US$1.5 million, Reinsurers at US$2 million, Micro insurers, US$100 000 and Insurance brokers at US$100 000,” she said.
The new capital requirements also seek to increase confidence within the insurance industry.
“The gazetting of the United States Dollar indexed minimum capital requirements for the insurance sector is part of our ongoing efforts to strengthen the sector’s financial soundness, resilience and ability to protect policyholders. Previously, capital requirements were set in local currency. However, due to inflationary pressures and currency volatility, the real value of those requirements has been significantly eroded over time. This undermined the very objective of capital adequacy, which is to ensure that regulated entities maintain a financial buffer that enables them to absorb shocks and meet obligations to clients,” Commissioner Muradzikwa added.
Regulatory authorities are focusing on consolidating viability gains and creating a platform for increased insurance business activities within the economy.
