THE INSURANCE and Pension Commission (Ipec) says the proposed Insurance Bill, set to harmonise the Insurance and Pensions Commission Act with the Insurance Act and the Pensions as well as the Provident Funds Act, is set to be tabled before Parliament soon.
By Fidelity Mhlanga
Ipec commissioner Tendai Karonga told NewsDay recently that the regulatory framework will protect policyholders and investors.
“Since there will be a sound regulatory framework, the amendments will maintain fair, safe and a stable insurance industry. It will also protect the interests of the policyholders and investors as well as contribute to the stability of the financial system,” he said.
The commissioner said audited financial results for insurance players should be submitted to IPEC by June 30 annually, with errant firms fined in terms of section 30 of the Insurance Act (Chapter 24:07) for insurance companies and section 37 of the Insurance Act for insurance brokers.
Karonga said Circular 1 of 2011, which was effected after the commission noticed that some market players were quoting premium rates below minimum agreed rates
“The commission sees undercutting premiums as a risk to the insurance company, as it will not have adequate funds to pay for that particular risk. To this end, insurance companies are urged to charge adequate premiums for the risk that they will be taking,” he said.
According to new Ipec thresholds, the minimum capital requirement for short-term insurance will be raised from $1,5 million to $2 million and for life insurers it will double to $5 million from $2,5 million in January next year.
The commission has urged insurance companies to consider mergers as a way of meeting the revised minimum capital requirements.