IPEC plans to replace 1990s actuarial tables

THE Insurance and Pensions Commission (IPEC) plans to develop actuarial mortality tables to replace those in current use, which were made in the 1990s.
The local insurance and pensions industry currently relies on tables from the United Kingdom and South Africa, along with the outdated local tables.
Speaking at the opening session of the fourth annual Actuarial Society of Zimbabwe (ASZ) convention in Harare last week, IPEC acting commissioner Blessmore Kazengura said the commission was prioritising the development of new mortality tables and had already chosen partners for the project.
“As part of our mandate to develop the market, development of mortality tables is one of the issues we have given priority… I am happy to advise that, as the regulator, we have led by example and already identified partners who will offer technical assistance,” said Kazengura.
Mortality tables are used to price insurance products and to calculate reserves for insurance companies.
IPEC pensions manager Nhau Chivingira said the tables basically look at the probability of death for an individual.
“If you want to sell an insurance policy to a 20-year- old, you are saying what is the likelihood that they will die, and the likelihood of death for a person who is 20 is different from a person who is 60-years-old, for example. So an insurer has to price the same product offered to the person aged 60 and one aged 20 differently using the mortality tables,” explained Chivingira in a statement to The Financial Gazette.
Chivingira said the World Bank was assisting IPEC in sourcing funding for the project, which is expected to kick off in the next three months.
“We have identified a technical partner, which is the World Bank. They are sourcing funding to bankroll the project so we should be good to go within the next three or so months,” he said.
IPEC, which envisages that the mortality tables would improve accuracy of reserves as well as appropriately price life policy products, says it also has plans to develop “a risk-based capital regime” borrowing from international best practice, in particular the Solvency II framework, which lays down technical standards for supervisory approval of various procedures in finance.
“We believe the successful implementation of the two projects will spur the growth of the insurance and pensions industry and improve its contribution to the economic development of the country,” Kazengura said.
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