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PLAYERS in the insurance and pensions sector should brace for tough regulations following Cabinet approval on Tuesday of the amendments to the Insurance Bill 2020 and the Insurance and Pensions Commission Bill 2020.

Through the proposed amendments, the Government intends to strengthen the institutional capacity of the Insurance and Pension Commission (Ipec) and the regulatory framework to create a robust and internationally respected insurance and pension industry.

This will see the Insurance Act being repealed while the National Social Security Authority (Nssa), medical aid societies and other persons conducting insurance business being subject to regulation by Ipec.

In order to guard against insolvency, every registered insurer will now be required to maintain a prescribed level of solvency.

It will also be compulsory for insurance societies to submit financial statements within 90 days of each financial year. The statements will have to be prepared in accordance with generally accepted accounting practices.

The reforms synchronise the main acts that guide the regulation of the insurance and pensions industry, and address identified deficiencies in the current legislation.

The aligning of insurance and pension legislation to international best practices is also expected to build a stronger regulatory framework that promotes growth and development of the insurance and pensions industry.

In a post Cabinet media briefing on Tuesday, Information, Publicity and Broadcasting Services Minister, Monica Mutsvangwa, said Cabinet considered and approved the amendments to the two Bills, which were presented by the Attorney-General, Advocate Prince Machaya.

“Among the amendments, Cabinet was informed that the (Insurance) Bill seeks to repeal the Insurance Act and introduce best practices in Zimbabwe’s insurance sector, which plays an important role in socio-economic development,” she said.

The Insurance Bill, for instance, sets out the rules to be followed in merging insurance societies, in the transfer of insurance business to a registered insurer and in the payment of premiums to registered insurers whenever an insurance broker receives the premiums from policy holders.

“All insurers will be required to submit to the Commission an actuarial valuation report, which must be harmonised with the relevant audit report.

“Insurers who wish to conduct electronic business must get Commission approval, while the issuance of disability benefits in life policies will be according to clearly spelt out conditions,” said Mutsvangwa.

“An insurance fund shall not be executable by creditors who are not the policy owners. A registered insurer may not place assets outside Zimbabwe without Commission approval, including on percentages that may be prescribed.”

In the event of currency change, the minister said Cabinet noted that steps must be taken by a registered person, including the actuarial valuation of the insurance business in order to re-calculate the liabilities and assets in line with the new currency.

“This provision is expected to enhance the protection of policy holders,” she said.

Minister Mutsvangwa said the Ipec (Amendment) Bill, 2020, in particular, seeks to ensure maintenance of a fair, safe and stable insurance and pensions sector for the benefit and protection of policy holders and pension fund members.

The Bill gives Ipec powers to accredit actuaries, auditors, asset managers, credit rating agencies and other service providers. Further, the Commission will conduct investigations where it sees fit for the purpose of preventing contraventions in the insurance sector through provisions of the Bill, said the minister.

“The Commission may co-operate with any supervisory authority, including foreign law enforcement authorities or insurance and pensions authorities in investigations, enforcement, coordination and harmonisation of laws, procedures and standards,” she said.

Among other functions, Ipec would ensure compensation is paid to beneficiaries for losses they may incur as well as determining the level of such compensation, based on the different classes of insurance policies or type.

The mandate extends to keeping and maintaining asset registers for insurers, insurance brokers, pensions and provident funds.

“The Insurance and Pensions Commission Bill will therefore strengthen the integrity of the insurance sector and enable it to play its role in supervising the sector,” said Mutsvangwa.