The Insurance and Pensions Commission (IPEC) has given policyholders the greenlight to use free funds to pay for their insurance premiums
at the official exchange rate as part of measures to deal with
the devastating effects of the deadly coronavirus pandemic.
The move follows the Statutory Instrument (SI) 85 of 2020 promulgated by the government recently allowing the transacting public to use
free funds for the purchase of goods and services in Zimbabwe.
The central bank also suspended the managed floating exchange rate it had earlier on this year introduced and adopted a fixed exchange rate
of ZWL$25: US$1, until the markets stabilise from the effects of COVID-19.
The measures, according to the Reserve Bank of Zimbabwe governor, John Mangudya, would be reviewed when the situation improves.
In a circular to insurance players, IPEC commissioner Grace Muradzikwa said the premiums or contributions must be chargeable in local
currency and payment may be made in foreign currency using an official exchange rate on the date of payment.
Insurers or brokers, however, cannot demand payment to be exclusively in
foreign currency but, rather provide an option to pay in foreign currency at the official exchange rate.
She, however, said the reprieve does not mean the return of US$ products the insurance sector has been craving for to build confidence in the industry.
“For the avoidance of doubt, the provisions of SI 85 should not in any way be construed as authorisation to use foreign currency-denominated policies,” she said in a circular dated April 2.
“Instead, as is clearly articulated in section 6 of SI 85 of 2020, policyholders have an option to their premiums, which are chargeable in Zimbabwe dollars, in foreign currency using free funds.”
Muradzikwa said the dispensation to use free funds will make payment of premiums easier.
“Policyholders may now pay their insurance premiums in foreign currency
using free funds at the prevailing rate on the date of payment. This means that in respect of policies that are denominated in Zimbabwe
dollars, policyholders maypay their premiums in foreign currency as provided for in SI 85 of 2020,” she said.
Muradzikwa said all other policies shall remain Zimbabwe dollar-denominated policies except for those that are expressly denominated in
foreign currency as authorised in terms of SI212 of 2019 and IPEC Circular 13 of 2019.
“The amount of the premium in foreign currency must be determined in reference to the Zimbabwe dollar amount, at the ruling rate on the date of the payment.
Policyholders who wish to pay their premiums in Zimbabwe dollars can continue to do so as normal,” she said.