Cabinet has approved the amendments to the Insurance Bill aimed at introducing best practices in Zimbabwe’s insurance sector, which is supposed to play an important role in socio-economic development, Business Times can report.
Under the new law, the insurance sector regulator, the Insurance and Pension Commission (IPEC), will now regulate the National Social Security Authority (NSSA) and medical aid societies.
Analysts said the lack of prudential supervision and regulation had somehow compromised service delivery in these institutions. Medical aid societies were under the purview of the Ministry of Health and Child Care while NSSA was under the Ministry of Public Service, Labour and Social Welfare.
The amendments in the Bill, which was presented by the Attorney-General on behalf of the Chairman of the Cabinet Committee on Legislation, are expected to enhance the protection of policy holders and pension fund members.
The latest development was confirmed by Information minister, Monica Mutsvangwa on Tuesday.
The Bill seeks to repeal the Insurance Act.
“Through the proposed amendments, the government intends to strengthen the institutional capacity of the IPEC and the regulatory framework to create a robust and internationally respected insurance and pension industry regulator and synchronise the main acts that guide the regulation of the insurance and pensions industry,” Mutsvangwa said at a post-Cabinet briefing Tuesday.
“It also seeks to address identified deficiencies in the current legislation and align insurance and pension legislation to international best practices in order to build a stronger regulatory framework that promotes growth and development of the insurance and pensions industry.”
She said NSSA and medical aid societies now come under IPEC’s regulatory authority.
The Bill gives the Insurance Commission the powers to accredit actuaries, auditors, asset managers, credit rating agencies and other service providers.
The Commission will conduct investigations where it sees fit for the purpose of preventing contraventions in the insurance sector through provisions of the Bill.
The Commission may cooperate with any supervisory authorities, including foreign law enforcement authorities or insurance and pensions authorities in investigations, enforcement, co-ordination and harmonisation of laws, procedures and standards.
The Bill also sets out the rules to be followed in merging insurance societies, in the transfer of insurance business to another registered insurer, and in the payment of premiums to the registered insurer whenever an insurance broker receives the premiums from policy holders.
Mutsvangwa said Cabinet directed that every registered insurer will now be required to maintain a prescribed level of solvency in order to guard against insolvency by insurance societies.
It will now be compulsory for insurance societies to submit financial statements within ninety days of each financial year. The statements must be prepared in accordance with generally accepted accounting practices.
All insurers will also be required to submit to the Commission an actuarial valuation report which must be harmonised with the relevant audit report.
Under the new law, insurers who wish to conduct electronic business must get Commission approval, while the issuance of disability benefits in life policies will be according to clearly spelt out conditions.