IPEC warns insurance firms over asset separation compliance
LIVINGSTONE MARUFU
The Insurance and Pensions Commission (IPEC) has issued a stern warning to firms that fail to separate policyholder and shareholder assets by December 31, 2025, cautioning that non-compliance will attract significant regulatory sanctions.
In a written response, IPEC actuarial director Robson Mtangadura said most insurance companies have already complied with the asset separation requirement, with only a few lagging behind.
“They have until December 31, 2025, to complete the asset separation process. Failure to meet the deadline will result in significant regulatory sanctions,” Mtangadura said.
IPEC has the authority to impose penalties, including annual levies on shareholder assets, should insurers fail to properly compensate policyholders for misappropriated funds. Currently, two life insurance companies and three funeral assurance companies remain non-compliant.
“Of the two life insurers, one is under enhanced monitoring due to financial difficulties. For the other, a forensic investigation has been completed and the Commission is now finalising the necessary enforcement actions. The three funeral assurance companies have been provided with a clear roadmap and guidance to achieve compliance. The two life insurers are on track and we expect those matters to be resolved sooner,” he said.
Mtangadura highlighted that the primary challenge lies with the funeral assurance sector, as many of these companies are smaller and require more tailored regulatory guidance. IPEC’s approach aims to ensure proper implementation of asset separation while allowing firms to continue promoting financial inclusion.
The Insurance Act provides a clear legal framework for the requirements, and the Commission has facilitated industry-wide training and capacity building to ensure understanding and compliance.
“Our focus is now ensuring compliance on an ongoing basis. To this end, we have institutionalised a verification process. The appointed auditors and actuaries for each company are now required to formally certify compliance with asset separation as part of their annual year-end audit and actuarial valuation reports,” Mtangadura explained.
Insurers and pension funds are expected to formally and physically separate assets by sub-account, a measure crucial for protecting retirement savings from losses, particularly given Zimbabwe’s history of hyperinflation. Proper separation also simplifies calculating compensation for policyholders when monetary assets have been misallocated.
IPEC can direct companies to compensate policyholders from shareholders’ own funds if asset separation reports reveal improper transfers. The regulator continues to monitor compliance rigorously.
The 2024 Insurance and Pensions Commission Amendment Bill strengthened IPEC’s powers, enabling enforcement of asset separation. This reform was a direct response to misconduct issues highlighted by the Justice Smith Commission of Inquiry. Under the new regulations, IPEC can compel regulated entities to maintain asset registers, provide 14 days’ notice before disposing of any recorded assets, and block disposals deemed contrary to public policy.
The regulatory push for asset separation addresses historical failures in Zimbabwe’s insurance and pensions industry.
IPEC aims to rebuild public trust and provide greater financial security for millions of Zimbabweans by ensuring a clear distinction between shareholder and policyholder assets.
