Medical Aid societies to fall under IPEC

Zvamaida Murwira-Senior Reporter

Government has gazetted the Insurance and Pensions Commission Amendment Bill which will result in the establishment of a policyholder and pension protection fund while medical aid societies will now fall under the Insurance and Pension Commission (IPEC) as the Second Republic seeks to reshape the insurance industry.

The gazetting of the Bill was announced by Clerk of Parliament, Mr Kennedy Chokuda in a Government Gazette published recently and is expected to be tabled before Parliament when it resumes sitting next year.

The proposed Bill is expected to strengthen the regulatory framework overseeing Zimbabwe’s insurance and pensions sectors and has far-reaching implications for insurers, pension funds, asset managers, and medical aid societies, which will now fall under IPEC’s regulatory scope. 

For the first time, IPEC’s regulatory powers are expanded to include the oversight of medical aid societies, ensuring a more comprehensive regulatory framework.

Clause Four of the Bill states functions of IPEC among others to register insurers, mutual insurance societies, insurance brokers and medical aid societies to ensure that they maintain set standards and ensure compliance with the Insurance Act.

Another role listed is to monitor, regulate and supervise those entities.

“To promote the maintenance of a fair, safe and stable insurance and pensions sector for the benefit and protection of policy owners and pension fund members, and to research and recommend on the international best practices in the insurance and pensions sector, and to conduct investigations into any particular registered person or class of registered persons, where the Commission considers such an investigation necessary for the purpose of preventing, investigating or detecting a contravention of this Act or any other law governing the insurance and pensions sector,” reads the Bill.

Clause 12 of the Bill has several provisions, chief among them is the establishment a Policyholder, Pensions, Provident Members Protection Fund to be administered by a Board.

The objective of the Fund will be to compensate policyholders and pension, provident or retirement annuity fund members for losses directly incurred by them in the event of insolvency by an insurer or pension fund.

Financing for the Fund will come from contributions from insurers and pension funds, as well as income from investments, unclaimed benefits, and other sources such as penalties and donations.

A new Board will manage the Fund, with members from key industry stakeholders, including insurers, pension fund representatives, and the Insurance and Pensions Commission.

Compensation will depend on the type of insurance or pension policy and may be adjusted based on any payments already made by the contributor’s liquidator or insurer

IPEC is given authority to approve service providers such actuaries, asset managers, credit rating agencies to operate within the insurance and pensions sectors.

The Bill also revises the composition and qualifications of the IPEC Board to between 7 to 9 members, with a stronger emphasis on experience in fields such as actuarial science, law and finance.

Directors will now be subject to stricter conflict of interest provisions, with disqualifications introduced for individuals with ties to regulated entities or conflicting interests.

Term limits for directors are clarified, allowing a maximum of two consecutive four-year terms.

In terms of the Bill, IPEC shall keep and maintain asset registers for insurers, insurance brokers, medical aid societies, and none shall dispose any of its asset without giving 14 days prior notice to IPEC.