THE Insurance and Pensions Commission (Ipec) has warned the funeral assurance sector to take compliance issues seriously to avoid regulatory sanctions.
This comes as the sector was found wanting in a number of sections at the end of the last year with non-compliance to prescribed assets and reinsurance arrangements topping the list.
According to the Ipec Q4 funeral assurance report, all the players were not compliant with minimum prescribed assets requirements for the sector with an average prescribed asset ratio of 0,007% against a required ratio of 10%.
“The commission is concerned by the continued non- compliance levels with prescribed assets. Few funeral assurance companies have submitted compliance roadmaps which have since been approved while some are yet to develop and submit roadmaps in line with SI 206 of 2019. The commission will be escalating measures to cause compliance,” Ipec said
During the period, the total invested in prescribed assets was only $47,4 million against the minimum required amount of $60,33 million to comply with the minimum prescribed assets threshold of 10%.
With the introduction of gold coins which have been accorded a prescribed assets status, Ipec said it expected the ratio to improve.
Ipec revealed that during the period, all funeral assurers did not have any reassurance plans in place.
“The commission is concerned by the continued lack of reassurance arrangements in the sector despite several commitments by the funeral assurance players. The sector is encouraged to seriously consider reassurance as a prudent risk management practice in the event of catastrophes, “Ipec pointed out.
The sector had one company who failed to meet the minimum capital requirement during the period with the seven other companies being compliant with the minimum capital requirement of $62, million
Total assets for the funeral sector increased by 5,31% to ZW$ 6,10billion from $5,80 billion from the previous quarter.
The increase in the asset value was partly due to inflation revaluation gains on asset values.
Ipec said the asset for the sector remained highly concentrated in constitutional property which constituted 67,55% of the total assets at the end of the year.
“The property concentration is constitutional property which mainly arises from the need by the sector to invest in assets that are used for funeral services provision. The commission calls prudent investment practices by funeral assurers , considering the need to continuously hold assets that match their liability profiles,” Ipec said.
“The sector continues to hold investments in equities, cash and money market instruments in very small proportions relative to the overall asset portfolio.”