PHILLIMON MHLANGA
Zimbabwe’s funeral assurance sector has failed to secure reassurance arrangements, the insurance sector regulator, the Insurance and Pensions Commission (IPEC) has revealed, a move which exposes the companies’ balance sheets and policyholders.
There are eight registered funeral assurance companies namely First Mutual, Moonlight, Foundation, Vineyard, Ruvimbo, Sunset, Passion and Orchid.
“All funeral assurers had no reassurance arrangements in place for the year ended 31 December 2021, resulting in a reassurance ratio of 0%. The sector is however encouraged to expedite the process to ensure that players are effectively reassured, so that they will manage to pay high claims in the event of catastrophes,” IPEC said.
“Sector players are also urged to have reassurance arrangements in place as a risk management tool to manage high loss experiences.”
The failure to deploy funds to reassurance companies as required by the law has added uncertainty in an already fragile sector.
The funeral companies have also failed to comply with the regulatory Prescribed Assets ratio of 10% of total assets.
The companies only accounted for an insignificant ratio of 0.16% of the total asset portfolio as at December 31, 2021.
Prescribed assets are bonds or securities issued by the government , local authorities , quasi – government organisations or any other bond that may be accorded the prescribed asset status.
“The total amount invested in prescribed assets was ZWL$4,69m against an expected minimum amount of ZWL$287,46m, for the sector to comply with the 10% minimum prescribed asset threshold,” IPEC said.
“The Commission recommends the development of sector-specific projects that speak to industry needs for the possible conferment of prescribed asset status as a way of enhancing compliance.”
According to official data obtained from IPEC, six out of the eight funeral companies were, however, compliant with the minimum capital threshold of ZWL$62,5m.
“The Commission continues to urge all players to be always capitalised.
The sector is also urged to adequately prepare for the new capital regime in light of the developments towards the implementation of the Zimbabwe Integrated Capital and Risk Framework,” IPEC said.
