HomeBusiness DigestIpec pushes to harmonise insurance legislation

Ipec pushes to harmonise insurance legislation

THE Insurance and Pensions Commission (Ipec) says it will push for three Bills to be passed by the incoming parliament as it seeks to harmonise national laws with international standards and best practice.

By Melody Chikono

The proposed legislation are the Pensions and Provident Act Bill, the Insurance Act, and the amendments of the Insurance Commission Act. Apart from aligning with international best practices, the amendments are also seeking to bring on board medical aid societies, legal aid societies and cater for the activities that are being conducted by these societies.

Ipec acting head of insurance and micro-insurance Nhau Chivingira told businessdigest on the sidelines of the Insurance Institute of Zimbabwe (IIZ) 2018 winter school in Nyanga recently that the commission was focussing on the alignment of laws to ensure policyholders get quality service. The proposed Insurance Bill is set to harmonise the Insurance and Pensions Commission Act with the Insurance Act and the Pension and Provident Funds Act.

“I hasten to point out that the issues to do with medical societies and the National Social Security Act are being held by government as they may involve moving one portfolio to the other ministry and so on,” he said.

On the Pension and Provident Fund Act, he said it was mainly to align core principles promulgated by international organisations on pensions supervisory and modernise the country’s pensions laws and also provide for separation of duty for various players in the pensions industry.

“You find that at the moment there are issues where one is a fund administrator and also a custodian and an asset manager for the same pension fund. That can actually bring corporate governance issues later in the running of the fund. The law thus will improve accountability in the pensions industry,” Chivingira said.

He added that the Insurance and Commission Act will seek to establish that Ipec is now independent from the government.

“This is the Act that established the commission thereby used to be a department before 2006 whereby the minster was the CEO. Basically, what we have been doing is making a lot of changes through circulars but now need to be made into law. Those did not include issues like risk-based capital and policyholder protection,” he said.

The Policyholder Protection Fund is now on the cards and modalities to the fund are being looked at.

“The fund is meant to ensure that we will have resources just like your DPC (Depositors’ Protection Fund) and IPF (Investors’ Protection Fund). We want to have a similar under insurance Act. We are setting up a fund which will be used to ensure that policyholders are compensated should the insurer go under,” he said.

Chivingira said for now, they are working on modalities for the fund which include how it will be financed. Funding through levies, government grant or committing a certain portion from an insurance company are some of the options being considered.

He said this fund would not cater for the 2008 losses as directed by the commission of enquiry.

Chivingira said the modalities of the fund were being put in place to establish core issues such as funding mechanisms with a debate brewing on whether it could not be merged with the DPF and IPF.

“Once the funding mechanism has been set up, we will then look at what point does this fund respond. We also want to avoid moral hazards where people abuse funds and say ‘go and get money from the fund’. The debate whether to merge it with DPF and IPF is there but the problem is they cover different sectors of the economy. We are still seeing if they can be brought together but so far it’s clear that the policyholder fund might not cover the whole industry as in 2008,” he said.

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