ZIMBABWE needs products that cover loss of value in the insurance and pensions industry amid dollarisation pressures within the economy, a senior banking official has said.
This comes at a time the country is working to come up with compensation for losses incurred by policyholders during the dollarisation of 2009. The decision to compensate came seven years ago after a government-appointed commission of inquiry found that the losses amounted to about US$3 billion.
Among a host of findings, retired High Court judge Justice George Smith’s Commission recommended wide-ranging reforms in the insurance and pension industry to curb corruption and poor corporate governance.
ZB Bank chief financial officer Emmah Mungoni told a CEO Africa Roundtable meeting last week that current products did not cover for loss of value, especially for pensioners.
“This is the largest sector in the financial sector … The monetary policy seemed to overlook the urge to find ways to preserve value for clients in this industry. Most businesses are under-insured whilst laws of the land do not permit insuring assets outside the country.
There is definitely a need to develop products which speak to a redollarising economy and to ensure that our businesses are fully insured,” Mungoni said. Mungoni expressed concern that currency management remained a headache for the financial sector.
“To solve it (currency management) the monetary policy should have pushed for a more credible exchange rate determination system outside the auction and willing buyer-willing seller model at the banks’ level.
“A mispriced exchange rate is a major driver of the confidence deficit in the local currency,” she said.
The insurance industry has suffered from a lack of confidence since the 2009 losses were experienced and hope compensation can restore the public’s trust.
Zimbabwe Insurance and Pensions Apex Council chairperson David Nyabadza told The Financial Gazette recently that the industry was now awaiting government direction after making submissions to the authorities. “Unfortunately, not much has moved since the announcements were made that we were working on this. The position remains that there have been engagements. We have seen the proposals that have come from the regulator and as an industry, we have made our proposals and our response.
“I think those have been considered and we are yet to get official feedback… It is now going through the processes in government as far as we have been told,” Nyabadza said.
The government has adopted the Justice Smith Commission’s findings and recommendations and the Insurance and Pensions Commission, the industry regulator, was tasked to implement the necessary reforms to improve the governance of insurance and pension entities, as well as supervise the implementation of the compensation framework.
newsdesdesk@fingaz.co.zw