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Ipec sets insurers capital thresholds



ZIMBABWE’S insurance sector regulator says it is finalising the drafting of United States dollar-indexed capital thresholds for short-term insurers as motor and fire insurance dominate the sector.


Official figures show that nearly 80% of total transactions done in Zimbabwe are carried out in hard currency due to currency volatility of the domestic unit. The government has since introduced a new currency, Zimbabwe Gold (ZiG), which will be backed by gold and foreign currency reserves.

According to the Insurance and Pensions Commissions of Zimbabwe (Ipec) fourth-quarter report for the year-ending 31 December 2024, during the period under review, direct short-term underwriters reported absolute foreign currency-denominated insurance revenue amounting to US$174.8 million constituting 74% of the total insurance revenue with the remaining 26% being absolute ZW$ business.

Ipec is a statutory body mandated with regulating, supervising, and developing the insurance and pensions industry for the protection of policyholders and pension scheme members in Zimbabwe.

“Gazetting of the US$ indexed minimum capital requirements is at an advanced stage. All industry players are expected to assess their current capital positions against the envisaged new requirements to ensure compliance once the regulations are gazetted,” reads the report.

“Further, the industry players are encouraged to measure their capital positions against the risk-based solvency regime under the Zimbabwe Integrated Capital and Risk Programme (ZICARP) framework.”

As at 31 December 2023, the short-term insurers reported total assets amounting to ZW$1.38 trillion in nominal terms.

Motor insurance alone accounted for 34% of the total insurance revenue, Ipec says.

“Foreign currency-denominated motor insurance is mainly driven by comprehensive cover as policyholders seek to preserve value,” reads the report.

Turning to capitalisation, 19 out of the 20 short-term insurers reported capital positions above the minimum capital requirement (MCR) of ZW$37.5 million.

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