Call for resilience in life insurance sector
THE Life Officers Association (LOA) has urged sector participants to capitalise on the current stability to bolster resilience within Zimbabwe’s life insurance industry, a crucial component for mobilising long-term savings for the national economy.
The LOA, representing life insurance companies in Zimbabwe, was established to promote the industry’s growth and sustainability. It also collaborates with regulators, policymakers, and financial institutions.
The insurance and pensions industry’s penetration rate, which peaked at 5,7 percent in 2004, currently sits between 1,5 and 2 percent. Stakeholders, including sector players, the Government, and the Insurance and Pensions Commission (Ipec), are engaged in initiatives to restore trust and expand this penetration rate.
LOA Secretary-General, Mr Rufai Mavukeni, speaking at a media engagement on Friday, emphasised that protecting customer assets is essential for building sector resilience.
“Currently, we operate within a multi-currency environment, but we propose a transition to a mono-currency arrangement by 2030. From our experience, we assert that policyholder assets must be safeguarded to prevent the value erosion witnessed in the past,” he said.
Mr Mavukeni outlined that the industry will collaborate with policymakers to develop strategies to shield assets from inflation.
“We were granted permission to begin offshore investments last year to protect customer values. This year, the procedure for offshore investment will be streamlined, enabling us to increase our external investments,” he said.
The Justice George Smith-led Commission of Inquiry, established by the Government in 2015, found that policyholders and pension scheme members were disadvantaged during the dollarisation conversion process and recommended compensation. The commission attributed the value erosion to inadequate regulatory enforcement and the demonetisation of the local currency.
These experiences have eroded policyholder and pension scheme member confidence in the insurance and pensions industry. To address this, Ipec has suspended the dissolution of pension funds pending the completion of pre-2009 compensation, ensuring fairness among members.
Compensation is a key initiative recommended by the Government to rebuild trust within the pensions and financial services sectors. The government has allocated US$175 million towards this effort, and pension funds have been directed to develop their compensation frameworks and payment plans.
Mr Mavukeni suggested that post-2030, either the multi-currency regime should continue, or existing investments should be ring-fenced to protect policyholders.-chrocile
