The Insurance Bill; which recently got a thumbs up from Cabinet, seeks to repeal and replace the current Insurance Act [Chapter 24:07]. The lobbyists for the Bill have highlighted that the major motive behind the Bill is to usher in best practices which have long been begged for in the insurance industry as well as to enhance protection for policy holders. The following is a glimpse of the proposed major changes:


a. Ensuring best practices and good corporate governance by insurers

  • The Bill seeks to improve corporate governance and internal controls of insurers by fostering the adoption of international best practices of good corporate governance.[1] Some of the changes in the Bill seek to ensure that at the very outset IPEC is satisfied that the registered insurer has proper management systems[2] and that they conduct their business prudently and lawfully.[3] To show its commitment to ensuring such good corporate governance, the Bill proposes civil penalties for insurers who would have been found wanting by IPEC.


  • The Bill also introduces the concept of independent directors in the insurance industry. An independent director is defined as any person who has no vested interest in the entity where he/she is a director of the Board.[4] It stipulates that at least 2/3 of the board of directors or other governing body of a society shall consist of independent directors.[5] Further, the majority of the audit committee shall be independent directors.[6] The chairperson of the audit committee shall also be one of the independent directors.[7] This is in line with corporate governance principles that mandates the oversight of an organisation to outside personnel who will not be conflicted in the day to day running of the business.


  • In a bid to enhance the supervision and investigations of insurers, the Bill provides a new provision which regulates the appointment, powers and tenure of inspectors. Any person will now be appointed as an inspector if in IPEC’s opinion that person has the necessary experience, qualification or skill to exercise office as an inspector. Even a body corporate such as ZIMRA will now be eligible for appointment as an inspector.[8] Once the body corporate has been appointed, all officers or employees of the body corporate who are designated by the head of the body corporate shall automatically be inspectors as well.[9]


b. Margin of solvency


  • In a bid to address the growing concern where most insurers end up insolvent, the Bill proposes a new manner of determining the margin of solvency that is target specific and subject to change from time to time. In such cases, the following factors will be taken into account: class of insurance, the proportion between assets and liabilities, liability in foreign currency, the developments of capital markets, protecting the interests of policy owners and international best practices.[10] This is unlike the manner of rigid calculation in the current Insurance Act.[11]


c. Curatorship


  • The Bill borrows from the Insolvency Act [Chapter 6:07] the idea of resuscitating failing businesses. It provides a new phenomenon of curatorship in terms of which IPEC may direct an insurer who is failing to meet minimum financial requirements or an insurer failing to operate in accordance with sound administrative and accounting practices to be placed under curatorship. [12]


  • The effect of placing an insurer under curatorship is that, the powers of every Director, Officer and Shareholder will be suspended to the extent that the curator may allow. [13]


d. Micro insurance business


  • The Bill also seeks to cover low-income households with insurable interest by introducing micro insurance businesses. Micro insurance business will be targeted towards provision of insurance to low income segments of the population in terms of cost, scope, coverage and delivery mechanism.[14] This niche will be to specifically provide protection of low income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risks involved.[15]


e. Currency Conversion


  • The Bill further enhances the protection of policy holders with retrospective provisions on currency conversion.[16] It provides that every insurer shall as soon as possible after the currency conversion date being, 24th June 2019, cause its actuary to calculate the insurer’s liabilities in the former currency towards its policy owners and other stakeholders taking into account the following;


  • Investment return up to that date;
  • The policy premium up to that date;
  • Premium payment period;
  • Rate of inflation; and
  • Other factors as may be necessary


  • It goes on to provide that pursuant to these calculations, the actuary shall apportion the fair value of the registered person’s assets in the new currency between the policy owners. [17]


The proposed changes will obviously need proper integration to assess their impact and whether they are compatible with the insurance sector in Zimbabwe.


[1] Extract from the Post Cabinet briefing of 23 February 2021

[2] Clause 27 of the Insurance Bill, 2021

[3] Clause 28 of the Insurance Bill, 2021

[4] Clause 2 of the Insurance Bill, 2021.

[5] Clause 23 (1) of the Insurance Bill, 2021.

[6] Clause 54 (2) of the Insurance Bill, 2021.

[7] Clause 54 (3) of the Insurance Bill, 2021.

[8] Clause 109 (2) of the Insurance Bill, 2021.

[9] Clause 109 (2) (a) and (b) of the Insurance Bill, 2021.

[10] Clause 41 of the Insurance Amendment Bill, 2021

[11] Section 24 of the Insurance Act [Chapter 24:07]

[12] Clause 116 of the Insurance Bill, 2021

[13] Clause 117 of the Insurance Bill, 2021

[14] Clause 2 of the Insurance Bill, 2021.

[15] Clause 2 of the Insurance Bill, 2021.

[16] Clause 135 (2) of the Insurance Bill, 2021

[17] Clause 135 (2) (b) of the Insurance Bill, 2021

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