Africa-Press – Zimbabwe. THE Insurance and Pensions Commission (IPEC) has expressed concerns over the continued non-compliance with the minimum Prescribed Asset ratio by all Funeral Assurers operating in the sector.
The asset ratio measures how well a company can repay its debts by selling or liquidating its assets. It is important because it helps lenders, investors, and analysts measure the financial solvency of a company as banks and creditors often look for a minimum asset coverage ratio before lending money.
In a recent update, IPEC revealed that as of June 30 2023, all funeral assurers were non-compliant with the Prescribed Asset ratio requirement of 10% as stipulated by Statutory Instrument 206 of 2019 with a sector average Prescribed Asset ratio of 0.07%.
“The Commission is concerned by the continued non-compliance with prescribed asset ratio requirements. Only one (1) entity submitted its compliance roadmap, which was approved, and the remaining seven (7) players are yet to develop and submit roadmaps in line with SI 206 of 2019.
“The Commission will be escalating regulatory measures to cause compliance,” the IPEC report said.
For the period ending June 30 2023, the nominal consolidated Gross Premium Written by the Funeral Assurance sector for the half year under review amounted to ZW$8,83 billion, an increase of 444.44% from ZW$1.62 billion recorded for the half year ended 30 June 2022.
“The inflation-adjusted Gross Premium Written increased by 97.44% from ZW$1.62 billion to ZW$3.20 billion for the period under review.
The absolute local currency GPW was ZW$5.30 billion, which was approximately 60.04% of the consolidated GPW. The remaining 39.96% was foreign currency-denominated business.
“For the foreign currency business, the sector recorded a total gross premium amounting to US$1.16 million and ZAR 0.39 million.
“As at 30 June 2023, seven (7) out of the eight (8) Funeral Assurers were compliant with the Minimum Capital Requirement(MCR) of ZW$62.50 million, as prescribed in Statutory Instrument 59 of 2020,” the IPEC report added.
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