Source: Low confidence affecting insurance uptake: Ipec | Daily News
THE Insurance and Pensions Commission (Ipec) says low confidence levels have led to low uptake of insurance and pensions fund by individuals.
Josphat Kakwere, IPEC’s head of pensions, said the regulator has observed that the low confidence is related to legacy issues.
“We have noted that legacy issues have led to low confidence levels.
“As long as an individual has a short term view for insurance then it is difficult to have confidence. This is for both insurance and pensions,” he said. This comes as the insurance sector is suffering from a confidence crisis emanating from the hyperinflationary period.
However, IPEC has in the past indicated that although poor claims settlement remain one of the reasons behind low confidence in the insurance sector, the regulator increased the minimum capital requirement so that insurers can have adequate reserves.
Low confidence has seen a 13 percent growth in Gross Premium Written (GPW) reported by direct life assurers for the nine months ended September, 30 2018 to $300,69 million from $265.95 million recorded in comparative period.
IPEC said the growth in GPW was mainly driven by funeral assurance and fund business as confidence in other type of life assurance products remained low. “The industry players are encouraged to devise ways to pass on some of the profits to policyholders as a way of cushioning the same policyholders against inflation thereby building confidence in the insurance industry,” the regulator said in its latest report.
Kakwere said fragmented regulation, poor corporate governance, foreign currency shortage, high pension contribution arrears and high expense ratios for some pension funds remain some of the major challenges for the sector. Zimbabwe’s insurance penetration rate, which reached a high of 10 percent in the early 1990s, has been declining over the last two decades, with official figures showing that it dropped to a low of 1,5 percent in 2015.
Meanwhile, Ipec executive Cuthbert Munjoma said about $30 million is lying idle in unclaimed pensions as close to 50 000 pensioners have not been collecting their monthly pension pay-outs.
“We also have about 50 000 pensioners and beneficiaries who have not been claiming their pension benefits to the tune of $30 million. Such beneficiaries of the unclaimed benefits could be living in poverty yet they have money lying idle at the pension funds,” he said.
He added that the regulator has over half a billion in pension contribution arrears, posing a risk on benefits.
“We have over $600 million in pension contribution arrears meaning that if the trend continues like that, those who are contributing may not get their pension benefits at retirement, as the pension fund would not have received such contributions,” he said.
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