The Insurance and Pensions Commission (IPEC) has intensified regulatory action against Zimbabwe's funeral assurance industry, describing it as the weakest-performing segment of the insurance sector due to persistent compliance failures, governance shortcomings and poor statutory reporting.
Speaking at IPEC's annual general meeting on Wednesday, Commissioner Grace Muradzikwa said the regulator had launched targeted inspections and was prepared to impose tougher sanctions on operators that continue to miss statutory deadlines and fail to comply with prescribed asset requirements.
"The funeral sector is our weakest segment at the moment. We are experiencing challenges around statutory reporting, failure to meet deadlines, very weak prescribed asset compliance, a low compliance culture and governance issues," Muradzikwa said.
"We have read the riot act to the funeral sector. We have instituted targeted inspections and we are ready to escalate regulatory sanctions where necessary. This sector is under close monitoring for a number of reasons. We are working closely with the industry and we will ensure that performance improves."
The warning comes as IPEC reported notable improvements in compliance across most other insurance and pension subsectors, with several segments surpassing the regulator's minimum compliance benchmark of 75%.
Muradzikwa said life assurance companies, life reinsurers, non-life insurers, pension funds and micro-insurers all recorded compliance levels above the threshold, reflecting what she described as a strengthening culture of regulatory adherence.
"While our ultimate goal is 100% compliance, the trends have been encouraging," she said.
Life assurance companies recorded an 87% compliance level, supported by strong adherence to minimum capital requirements and prescribed asset obligations.
Non-life reinsurers achieved a compliance rate of 76%, although some firms continue to face challenges in meeting prescribed asset investment requirements.
Life reinsurers recorded an 83% compliance ratio and remained well-capitalised, with improvements also noted in prescribed asset investments.
The non-life insurance sector remains under pressure following the introduction of United States dollar-denominated minimum capital requirements last year.
"We introduced US dollar minimum capital levels last year and some players are still working towards full compliance. We have agreed compliance roadmaps with those institutions and we are engaging them to ensure they meet their obligations," Muradzikwa said.
Micro-insurers emerged as the strongest-performing segment, achieving a 90% compliance rate.
Muradzikwa attributed the performance to stronger governance structures and improved adherence to minimum capital requirements.
"Micro-insurers are topping the list at 90%. We have seen better governance and stronger compliance with minimum capital requirements. There are lessons that other sectors, particularly non-life insurers, can learn from the micro-insurance sector," she said.
Meanwhile, IPEC revealed that newly acquired garnishee powers are already yielding positive results in the recovery of outstanding pension contributions from defaulting employers.
Muradzikwa said the commission's enforcement measures had encouraged many employers to engage with the regulator and negotiate repayment plans to settle arrears owed to pension funds.
"The garnishee powers have produced positive results. We are seeing queues of employers coming to the commission to negotiate payment plans. They are now paying their contributions to pension funds and we are very pleased with the outcomes," she said.
"These powers are proving to be extremely effective and have contributed to a significant reduction in contribution arrears."
The regulator's latest stance signals a tougher compliance environment for funeral assurance providers, with IPEC indicating that enforcement efforts will intensify until governance standards and regulatory compliance improve across the sector.
- Business Times
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