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Business Reporter
THE greenlight to use free funds in conducting domestic transactions should not be misconstrued as authorisation to issue foreign currency denominated insurance policies, the Insurance and Pensions Commission (IPEC) has said.

As part of measures to mitigate financial vulnerabilities caused by the novel coronavirus (commonly referred to as Covid-19), the Government recently issued Statutory Instrument 85 of 2020 to facilitate payment for goods and services chargeable in Zimbabwe dollars, in foreign currency using free funds at the prevailing rate on the date of payment.

As a result of this policy guideline, the Commission, through Circular 7 of 2020 sent to all insurers and insurance brokers, has explained that policyholders may now pay their insurance premiums in foreign currency using free funds at the prevailing rate on the date of payment.

“This means that in respect of policies that are denominated in Zimbabwe dollars, policyholders may pay their premiums in foreign currency as provided for in S.I 85 of 2020,” said Mrs Grace Muradzikwa, Commissioner of insurance, pension and provident funds.

“For the avoidance of doubt, the provisions of S.I 85 should not in any way be misconstrued as authorisation to issue foreign currency denominated policies.

“Instead, as clearly articulated In section 6 of SI 85 of 2020, policy holders have an option to pay their premiums, which are chargeable in Zimbabwe dollars, in foreign currency using free funds.”

Thus, with the exception of policies that are expressly denominated in foreign currency as authorised in terms of Statutory Instrument 212 of 2019 and IPEC Circular 13 of 2019, IPEC has said that all other policies shall remain Zimbabwe dollar denominared policies.

It noted that the amount of premium in foreign currency must be determined in reference to the Zimbabwe dollar amount at the prevailing rate of the date of payment.

“Policyholders who wish to continue paying their premiums using the Zimbabwean dollar can continue to do so as normal.

“It should be noted that the measures outlined in Statutory 85 of 2020 are a reprieve to the adverse impact of Covid-19, and are expected to be reviewed when the situation improves,” said the Commission.

“All insurers and insurance brokers are required to comply with the provisions of Statutory Instrument of 2020 and Exchange Control Circulor No 3 with respect to treatment of receipts of premium in foreign currency.”