Finance Minister Mthuli Ncube says government has reviewed upwards the minimum prescribed asset thresholds for the insurance and pension industry which were introduced in 2010 in order to improve resource mobilisation to support key national projects.
The minimum prescribed asset thresholds for both short-term non-life insurers and reinsurers have been doubled from 5% to 10%.
Life assurers will be doubled from 7,5% to 15% while funeral assurers will increase from 7,5% to 10%.
The minimum prescribed asset threshold for pension funds was increased from 10% to 20%.
"Insurance companies and pension funds are expected to comply by 31 December 2019. In this regard, players should provide compliance roadmaps to IPEC (Insurance and Pensions Commission) by 31 January 2019. Furthermore, with effect from 1 January 2019, Prescribed Asset Status will be conferred to Government-related projects only," Ncube said.
Ncube said the government would enact the necessary legislation to enforce and guide implementation of recommendations made by the commission of inquiry into the conversion of insurance and pension values from the Zimbabwean dollar to the United States dollar when the country dollarised in 2010.
The Justice Smith-led commission was set up in 2015 to assess the conversion methods and processes of insurance and pension assets and liabilities to United States dollars, to establish the extent of prejudice, if any, to policyholders and pensioners, as well as to recommend compensation where prejudice was established, among other matters.
The commission of inquiry recommended wide-ranging reforms in the insurance and pension industry in order to curb rot and poor corporate governance plaguing the sector.
Among its recommendations, the commission called for a review of the Insurance Act, the Pension and Provident Funds Act, the Insurance and Pensions Commission Act and the National Social Security Authority (Nssa) Act to protect people's savings but government has all along seemingly turned a deaf ear.
The commission also recommended that the government bring Nssa and medical schemes under the purview of the Insurance and Pension Commission (Ipec) to enhance transparency, accountability, protection of policyholders and to consolidate the regulation of insurance and pension businesses under one statutory body.
"Following government's adoption of the Justice Smith-led inquiry into the conversion of insurance and pension values, Ipec, as the industry regulator, was given the mandate to implement the necessary reforms to improve governance of insurance and pension entities, as well as supervise implementation of the compensation framework."
"This was to ensure that prejudiced members of the insurance and pension schemes get their benefits without compromising stability and confidence in the industry. In order to facilitate smooth implementation of the recommendations, government will enact legislation to enforce and guide the compensation process."
The inquiry revealed that loss of value in insurance and pension benefits was mainly caused by macro-economic regulatory and institutional factors.
"Regulatory failure on the part of government and the regulator for insurance and pensions was identified as having caused loss of value. Government failed to guide the industry during the hyperinflation and currency debasing and during the conversion of insurance and pension values when the economy was dollarised.
"Furthermore, the delayed demonetisation of the ZW$ currency resulted in the various entities in the industry applying their own conversion methods which were prejudicial to policy holders and pensioners."
"On the other hand, Ipec, that is the commission responsible for insurance and pensions, failed to conduct on-site supervision and investigate its licensees, allowing arbitrary insurance product terminations by insurance companies, poor investment management practices, poor record keeping and failing to deal with predatory administration expenses among other issues."
The commission also called for operational independence of Ipec in order to achieve objective decision-making, accountability and transparency.