Government is committed to capacitate the Insurance and Pensions Commission (IPEC) so that it plays a critical role towards achieving growth of the insurance penetration rate to about 20 percent, Finance and Economic Development Minister Professor Mthuli Ncube has said.
Minister Ncube said this while addressing IPEC management and staff during a familiarisation tour of the insurance regulator’s offices in Harare on Friday.
Zimbabwe has a pensions penetration rate of about nine percent, while the insurance penetration rate is about three percent.
The rates are a reflection of how Zimbabweans have lost faith in the insurance sector, with pensioners being the hardest hit after their contributions were eroded by currency changes on many occasions.
The erosion has also resulted in a sizeable chunk of pensionable employees engaging their employers for them to be allowed to continue working despite having reached retirement age.
The workers have less confident on the safety net that pensions should guarantee.
The health insurance sector is also suffering with policy holders ditching policies due to their failure to cover medical needs.
This comes in the wake of some service providers demanding to be paid upfront in cash or US dollars.
Businesses are also struggling to receive cover after some accidents, with some insurance firms raising many issues.
The call by Minister Ncube to increase insurance penetration is in line with Government’s economic blueprint, the Transitional Stabilisation Programme (TSP), which prioritises the need to grow the insurance and savings sector, which is critical to economic growth.
“One of the pillars of the TSP (Transitional Stabilisation Programme) is savings mobilisation and you are at the centre of that,” said Minister Ncube.
“We would like the insurance penetration rate to be about 20 percent — pensions penetration is currently about nine percent or just below that figure and then the insurance penetration is about three percent.
“So we really want to push this up. I think one area that we could focus on and support you is the area of innovation.
Things such as mobile insurance, supporting and encouraging new products – all these are growth areas for which as Government, we stand ready to support you as the regulator in making sure the industry does the right thing,” he said.
Minister Ncube promised that Government would assist the insurance regulator to acquire better offices.
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The new offices will afford the insurance regulator space and in the future recruit more staff needed to drive the service delivery agenda.
The Minister commended IPEC for doing its best to resolve issues that arose as a result of the currency change in 2008, which saw the country dollarising.
Minister Ncube said Government hoped this time the insurance industry will do the right thing in terms of valuations occasioned by the transition from the multi-currency basket system — particularly the US dollar back to the Zimbabwe dollar.
Zimbabwe ditched the use of the US dollar in June this year through the promulgation of SI 142, also known as Reserve Bank of Zimbabwe (Legal Tender) Regulations.
The net effect of promulgating the SI was the banning of the multi-currency system, which had been in operation for a decade and this also applies to the insurance premiums.
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