IPEC cracks whip on funeral sector

CLOUDINE MATOLA

The Insurance and Pensions Commission (IPEC) has intensified regulatory action against Zimbabwe’s funeral assurance industry after describing it as the weakest segment of the country’s insurance sector, citing persistent compliance failures, poor governance and weak statutory reporting.

Speaking at IPEC’s annual general meeting on Wednesday, Commissioner Grace Muradzikwa said the regulator had stepped up targeted inspections and was prepared to impose tougher sanctions on operators failing to meet statutory deadlines and prescribed asset requirements.

“The funeral sector is our weakest segment at the moment. We are experiencing challenges around statutory reporting, failure to meet deadlines, very weak prescribed asset compliance, a low compliance culture and governance issues,” Muradzikwa said.

“We have read the riot act to the funeral sector. We have instituted targeted inspections and we are ready to escalate regulatory sanctions where necessary. This sector is under close monitoring for a number of reasons. We are working closely with the industry and we will ensure that performance improves.”

Despite concerns in the funeral assurance industry, Muradzikwa said compliance levels had improved significantly across most other insurance and pension subsectors.

Life assurance companies, life reinsurers, non-life insurers, pension funds and micro-insurers all recorded compliance levels above IPEC’s 75% benchmark, reflecting what the regulator described as a strengthening compliance culture.

“While our ultimate goal is 100% compliance, the trends have been encouraging,” she said.

Life assurance firms recorded compliance levels of 87%, underpinned by strong adherence to minimum capital requirements and prescribed asset obligations.

Non-life reinsurers achieved a 76% compliance ratio, although Muradzikwa noted that some operators were still struggling to meet prescribed asset requirements.

Life reinsurers registered an 83% compliance level and remained highly capitalised, with improvements also recorded in prescribed asset investments.

The non-life insurance sector, however, continues to face challenges following the introduction of new United States dollar-denominated minimum capital requirements last year.

“We introduced US dollar minimum capital levels last year and some players are still working towards full compliance. We have agreed compliance roadmaps with those institutions and we are engaging them to ensure they meet their obligations,” she said.

Micro-insurers emerged as the best-performing segment, recording a 90% compliance rate.

Muradzikwa attributed the strong performance to improved governance structures and better adherence to minimum capital requirements.

“Micro-insurers are topping the list at 90%. We have seen better governance and stronger compliance with minimum capital requirements. There are lessons that other sectors, particularly non-life insurers, can learn from the micro-insurance sector,” she said.

Meanwhile, IPEC revealed that it has started exercising newly granted garnishee powers to recover outstanding pension contributions from defaulting employers, a move that has significantly reduced arrears within the pension sector.

Muradzikwa said the enforcement measures had prompted many employers to approach the commission to negotiate payment plans and regularise their obligations to pension funds.

“The garnishee powers have produced positive results. We are seeing queues of employers coming to the commission to negotiate payment plans. They are now paying their contributions to pension funds and we are very pleased with the outcomes,” she said.

“These powers are proving to be extremely effective and have contributed to a significant reduction in contribution arrears.”