THE insurance sector has been urged to undertake research and development as well as strengthen self-regulation in the sector.
In a presentation at the recently held Insurance Institute of Zimbabwe (IIZ) annual conference, Insurance and Pension Commission (Ipec) head of prudential supervision, Pupurai Togarepi said this needs to be conducted through the institute.
He said there was need for urgent research and development through IIZ in the areas of product development, market changes and penetration, changing insurance risks and needs as well as ethical standards and international best practice.
Togarepi said self-regulatory bodies in the sector such as the Insurance Council of Zimbabwe and the Zimbabwe Insurance Brokers Association, “should have more teeth” if they are to be effective. He said self-regulation was necessary as it protects from what he called “burdensome and sometimes inappropriate government regulation”.
He added that self-regulation complements Ipec regulatory efforts that often provide for registration and financial accountability of insurers but may not effectively address distinct challenges faced by players in the sector.
He, however, warned there are pitfalls in self-regulation such as conflict of interest among players in the industry as well as the pressure of competition which could compromise adherence to ethics.
Togarepi revealed that the current insurance sector includes 23 short-term insurance companies with assets of more than US$170 million, 10 life insurance companies worth more than US$2,8 billion and more than 1 000 pension funds with an asset base worth more than US$2 billion.
The sector, he said, faced various challenges. In the short-term insurance sector, the challenges include liquidity crunch, poor underwriting, high repudiation levels as well as outstanding premiums and low business in the reinsurance sector. Challenges faced by pension funds, Togarepi noted, include low pay outs, zerorised assets, poor governance (trustees), arrear contributions as well as high expense ratios
He encouraged IIZ to undertake more short courses to improve competence in areas such as governance in insurance and pensions, consumer protection, code of ethics, micro insurance and insurance principles.