ONLY four funeral assurers in Zimbabwe are meeting the prescribed capitalisation thresholds, the Insurance and Pensions Commission (IPEC) Funeral Assurance Report for the first quarter of 2021 shows.
The insurance regulator reported that as of 31 March 2021 four were compliant with the regulatory minimum capital requirement of $62.50 million as prescribed by Statutory Instrument (SI) 59 of 2020.
"The Commission is instituting a raft of measures to cause compliance by the non-compliant entities. We urge players to adhere to their capitalisation compliance roadmaps to ensure they are capitalised at all times," it said.
The report shows that as of 31 March 2021, the capital positions for funeral assurers ranged from $5.32 million to $204.36 million.
Some of the funeral assurers were under-capitalised to as little as $5.3 million from the required $62.50 million.
Under-capitalisation occurs when a company does not have sufficient capital to conduct its normal business operations and pay creditors.
However, IPEC said it was working on ensuring the affected funeral assurers were compliant.
"The commission is instituting a raft of measures to cause compliance by the non-compliant entities. We urge players to adhere to their capitalisation compliance roadmaps to ensure they are capitalised at all times," it added.
However, according to IPEC, during the period under review, the funeral assurance sector's inflation adjusted gross premiums written (GPW), increased by 158.28% from $22.03 million for the quarter ended 31 March 2020 to $56.90 million for the quarter ended 31 March 2021.
In nominal terms, new business accounted for the major increase in GPW increasing by 349% from $956, 198 in March 2020 to $4.3 million reported for the quarter ended 31 March 2020.
IPEC added players in the funeral assurance industry should endeavour to comply with applicable laws and regulations particularly on minimum capital requirements and prescribed assurers so that they remain relevant.
"The commission urges funeral assurers to devise strategies to withstand the continued pressure and competition from life assurers so that they remain relevant."