HARARE – The Insurance and Pension Commission (Ipec) said it will compel all insurance companies to publish financial statements as part of strategies to promote transparency and increase credibility in the sector.
The regulator’s commissioner, Tendai Karonga, yesterday said insurance fraud — estimated to gobble around 30 percent of premium funds annually — had necessitated the measure, anticipated to be in effect by end of March next year.
Presently, only listed insurers publish their financials, with the rest reporting exclusively to Ipec.
“The commission, through proposed amendments to the Insurance Act, will require that all insurance companies publish their financial statements, regardless of whether they are listed on the stock exchange.
“This will help in instilling market discipline since stakeholders will now be more informed and will therefore punish insurers whose financial statements will not be depicting a good standing,” Karonga told members of the accounting profession at a joint Ipec-Institute of Chartered Accountants of Zimbabwe (Icaz) seminar in the capital.
As part of measures to curb insurance fraud and maintain corporate governance in the sector, Karonga also said the regulator was going to start vetting office bearers.
“The commission has come up with fit and proper assessment criteria to vet all proposed office bearers for key positions within an insurance company. This criterion will be looking at qualifications, experience as well as integrity of the proposed appointees,” he said.
He noted that insurance companies needed to borrow a leaf from colleagues in the banking industry by crafting comprehensive risk management systems.
“…This will enable a detailed analysis of the risk management situation in the annual financials which are then used by different stakeholders.
The Ipec boss said the insurance sector watchdog also wanted insurers to conduct solvency self-assessments.
“Insurers are now called upon to proactively conduct solvency self-assessments. This will call for up-skilling of the regulated entities themselves and the need for auditing firms to train their personnel on how to review the self-assessments,” he said.
Additionally, Karonga said insurers needed to ensure they had adequate reserves to cover all claims.
“The reserves set aside should be adequate to cater for all reserves including incurred but not reported claims, unearned premium reserves.
“For unearned premium reserves, the 1/365th method is more accurate. The insurers should also practice sound asset-liability matching,” he said.
Highlighting that the commission expected insurance companies to timely meet obligations to policyholders, Karonga said the industry has been struggling to disburse pay-outs.
“… Claims must be met timeously, as opposed to practices that we have noted in certain cases where claim settlements are made in instalments,” he said.