It is more than a year since complaints from pensioners and insurance policyholders, generally, became louder and more categorical. These complaints against insurance companies and related pension and insurance service providers are to the effect that insurance companies are seriously prejudicing them by entitling them and paying out benefits far less than the outlays they placed with them, this in breach of contractual undertakings.
Insurance companies have to date ignored these calls to consider benefit claims enshrined in these complaints.
These complaints led to an appeal to the regulator of pension and insurance industries, Insurance and Pension Commission of Zimbabwe in March 2012. IPEC made an undertaking to investigate.
In due course, the Minister of Finance confirmed that such an investigation was underway. Much like IPEC handled the crises at Afre and about the mass deregistration of pension funds, no details were given about this investigation, contrary to established practice for public enquiries.
Thenceforth this investigation became a guarded secret of IPEC. To date, eight months later, rumours go the rounds that the investigation was completed three months ago in August 2012. If correct, it can be guessed that the findings do not put IPEC in good stead. If the investigation is not complete, clearly IPEC cannot do the job, and must be disciplined as already publicly called for.
In the run-up to this investigation, it had become a concern that IPEC appeared not to be acting transparently in keeping with its regulatory duties. Among other apparent failures, IPEC would not act in the face of the insurance company stance to ignore pensioner calls to pay up full benefits and would not publicly disclose findings of investigations such as on Afre.
It was soon to be established that the IPEC board was replete with insurance company executives, with an interest clearly conflicting with that of pensioners. It became clear that IPEC would not transparently conduct the investigation on the adequacy of pension and insurance policy values entitled by insurance companies.
An appeal to the Minister of Finance by the Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT) and its partners appears to have led to some action to resolve this stand-off, as the Government Gazette of July 27 2012 announced a new IPEC board member in place of one of the conflicted insurance executives.
The Minister of Finance subsequently announced in early November 2012 that he had taken steps to hold IPEC to account.
There were hopes that a total resolution of the stand-off was imminent. However follow-ups with the minister's office reveal that IPEC has still not bothered to respond to the minister with regards to why insurance companies are not complying with the right of pensioners to be responded to about their claims, and with regards to the progress of the investigation announced by the minister in May 2012.
Apparently the minister had directed a further review of the IPEC board, whose implementation is apparently being held up somewhere in the ministry.
It appears IPEC is curiously getting away with real murder as some pensioners are actually dying of destitution and potentially leaving their benefits with insurance companies. IPEC is getting away with it even as the minister is trying to resolve this issue. Why then is IPEC behaving with this apparent impunity?
IPEC's behaviour and attitude in this stand-off can best be understood in light of its line of reporting to the Minister of Finance, vis-a-vis the minister's duty to the public.
The public here referred to include the domestic investor - pensioners and insurance policyholders included. It is clear that the minister has the ultimate responsibility and duty to the public, to pensioners and policyholders in this particular case, to ensure that insurance companies do not prejudice this sector of the public.
A management system is therefore in place to ensure that the minister executes this duty and achieve the domestic investment objectives thereof. In Zimbabwe the Commissioner of IPEC is in place to oversee the efficient operation of the pensions and insurance industries such as to achieve these domestic investment objectives.
The Commissioner is appointed by the IPEC board. IPEC board is responsible for supervising the Commissioner in the latter endeavour, while this board, in turn, is accountable to the minister, through the Permanent Secretary of Finance, as depicted in the diagram above.
This means that the permanent secretary is accountable to the minister. The minister appoints the IPEC board, but does not appoint the permanent secretary.
To the extent that the minister does not appoint the permanent secretary, there is scope that the latter office and appointment may, in some circumstances, not fully be committed to the interests of the minister as demanded by his role/duty to the public (pensioners and policyholders included).
This status quo is, of course, apparent to both the Commissioner and the IPEC board. In the circumstances when the interests of the Commissioner and IPEC board are also not aligned with those of the minister, and in particular aligned with those of the permanent secretary, it is reasonable to conclude that IPEC as a whole can work together with the office of the permanent secretary to undermine the minister's execution of his public duty. This would be done in the full knowledge that the sitting permanent secretary is not appointed by the minister and that this permanent secretary cannot ultimately be disciplined effectively by the minister.
In a scenario like the one just outlined IPEC could act with impunity and leave pensioners gravely prejudiced. Is it, in fact, why IPEC is apparently behaving as such? If so, Government may need to review the reporting lines and practices used to appoint officers in this part of the ministry.
This may need intervention of the highest authorities of the land as it is here submitted that it is not the intention of the authorities to have a few individuals nationally prejudicing the domestic investor in a way insurance companies and IPEC are apparently doing.