HARARE, The Insurance and Pensions Commission (IPEC) is targeting the insurance penetration ratio to at least 4% by end of 2018 from the current 3.6% largely on the back of new socio-political dispensation driven economic growth.
IPEC Commissioner Tendai Karonga told Insurance24 that as the economy responds to the raft of austerity measures introduced by the Minister of Finance and Economic Planning in the 2018 National Budget, the Commission expects the insurance penetration rate to significantly improve given that insurance depends on the fortunes of the economy.
“The 2018 National Budget projected an economic growth rate of around 4.5% on the back of scaled up funding for agriculture and implementation of reforms. The Commission expects these reforms to open up new opportunities for growth in the insurance industry and improved uptake of financial services products particularly insurance products thereby increasing the penetration ratio,” he said.
According to the 2014 FinScope Consumer Survey only 30% of the Zimbabwean population was insured showing low uptake of insurance products.
Comm Karonga said as the business environment improves, the Commission expect improved economic fortunes for both corporate entities and individuals thereby increasing the uptake of insurance products.
“In this regard, the Commission expects growth in the insurance industry in line with the projected economic growth.”
The Commissioner also said the Commission expects to modernise the regulatory environment by finalising amendments to the Insurance Act [Chapter 24:07] and the Insurance and Pensions Commission Act [Chapter 24:21].
“In short, we expect the industry to remain stable and to register appreciable growth in most classes of insurance particularly motor and the asset classes,” he said.
On other hand, Comm Karonga said the uptake of micro insurance products by the industry is still not at its optimum but expect the development of micro insurance products by the industry to significantly improve as the implementation of the National Financial Inclusion Strategy gathers momentum.
Last year several companies introduced different micro-insurance products that were affordable to the lowest income earner.
Meanwhile, Comm Karonga said industry compliance to the minimum capital requirements and prescribed asset thresholds is a statutory obligation, which should be complied with by industry players.
He said the legislative framework for the new capital requirements introduced in 2016 was only gazetted in August 2017 through Statutory Instrument 95 of 2017 owing to a protracted approval processes.
In that regard, he said, the Commission is currently engaging the industry to ensure compliance and regulatory sanctions will be applied for non-compliance.
To date, there has not been any litigation for non-compliance with both prescribed assets thresholds and minimum capital requirements. Karonga said it is rare to engage in litigation over these issues as the consequences of non-compliance are clearly set out in the Insurance Act. – Insurance24