PHILLIMON MHLANGA
The Insurance and Pension Commission (IPEC) will soon start implementing the recommendations made by a Commission established three years ago to probe the process used to convert pensions and insurance benefits following dollarisation of the economy in 2009.
The Commission was led by retired judge Justice George Smith and included Violet Mutandwa, Anesu Daka, Brains Muchemwa, the late George Dikinya, Godfrey Kanyenze, Tapiwa Maswera, Itai Chirume and Martin Tarusenga. It was set up by former President Robert Mugabe in 2015 to look into the conversion of insurance and insurance values from the Zimbabwe dollar.
The investigation report was released last year and was adopted by both Cabinet and Parliament.
Findings of the Commission, which still haunt the insurance and pensions sector, showed that policyholders were prejudiced of at least $3 billion which was splurged on administration and other expenses that did not sustain growth of pension and insurance benefit.
The report also revealed that insurance and pension industry players did not keep consistent and reliable asset values during the pre-dollarisation period resulting in ordinary Zimbabweans failing to assess risks and ultimately investing their hard earned money down the drain.
IPEC head of pensions department, Josphat Kakwere, told on the sidelines of a roadshow held in Mutare at the weekend that the industry regulator would soon be implementing the recommendations made by the Commission.
“We have been given the go ahead to implement the recommendations (made by the Commission of Inquiry into the conversion of insurance and pension values from the Zimbabwean dollar to the United States dollar). We will be communicating soon to the industry.”
The commission submitted a number of recommendations as part of post –inquiry reforms and underscored the need to implement these in a “smooth manner that balances stability of the industry and bring closure to the outstanding matter of loss suffered by policyholders and pensioners in the absence of a guided conversion process in 2009”.
Some of the recommendations put forward by the commission include subjecting insurance companies to regular on-site visits and inspections by the regulator to check the adequacy and effectiveness of the information, communications technology processes and controls and the quality of the data which they maintain and the amendment of the insurance and pensions legislation to prescribe the minimum period within which insurance and pension records should be maintained for at least 100 years.
In order to protect consumers of the insurance and pension services, the commission recommended that IPEC should be obliged to maintain an independent register of the assets and the corresponding liabilities of insurance and pension funds on a product by product basis which is cumulatively adjusted on a year to year basis in order to take into account changes in the assets and liabilities that happen in each year.
The Commission also recommended that IPEC should be empowered to order the players in the sector to submit to it investment policy statements, which should be renewed regularly.
Considering the adverse impact and industry-wide problem of contribution arrears, which now amount to more than $600 million, the commission recommended that there was need to review the pension legislative framework to introduce punitive sanctions on the sponsoring employers and respective directors in their personal capacities for non-remittance of pension contributions.
The Justice Smith-led Commission also recommended the establishment of an Ombudsman for the insurance and pension industry and to regulate cannibalistic administrative expenses, which were the biggest cause of loss of value in a dollarised environment.
