ZIMBABWE’S insurance regulator says the country’s funeral assurance sector — currently dominated by two players — has no reassurance arrangements, warning that the sector may collapse if the country is hit by an emergency crisis.
The outbreak of the Covid-19 pandemic stretched some players to the limits after the Delta variant drove fatalities in the country.
According to the latest Insurance and Pension Commission (Ipec) report for the six months to June, the funeral assurance sector recorded nominal gross premium of ZW$1.62 billion for the half-year ended 30 June 2022, an increase of 241.71% compared to ZW$474.61 million reported for the half-year ended 30 June 2021.
After adjusting for inflation, the funeral assurance sector’s gross premium written (GPW) increased by 17.20% from ZW$474.61 million reported for the six months ended 30 June 2021 to ZW$556.24 million for the six months ended 30 June 2022.
In terms of forex business, the sector wrote gross premium of US$132 359 and 119 082 rands for the half-year ended 30 June 2022.
“All funeral assurers had no reassurance arrangements in place for the half-year ended 30 June 2022,” Ipec says.
“The Commission is aware of various engagements which the sector is having with their reassurers to ensure that there are suitable reassurance arrangements in place. The sector is however encouraged to expedite the process, to ensure that players are effectively reassured, to enable them to pay high claims in the event of catastrophes.
“For the six months ended 30 June 2022, two players dominated the Funeral Assurance Sector in terms of GPW, with a total market share of 83.92%. The remaining six (6) funeral assurers accounted for the 16.08% difference.”
The report further shows that as at 30 June 2022, seven (7) out of the eight (8) funeral assurers were compliant with the regulatory minimum capital requirements (MCR) of ZW$62.50 million as prescribed by Statutory Instrument 59 of 2020.
During the same period under review, all funeral assurers were not compliant with the minimum prescribed asset ratio of 10%, as stipulated by Statutory Instrument 206 of 2019.
Prescribed asset investments were very small as they accounted for an average of only 0.08% of the total asset portfolio.