Insurance policyholders and pension fund members who lost value due to inflation are expected to start receiving compensation starting from March 2024 following the gazetting of the compensation framework.
The Government in 2015 constituted a commission of inquiry to investigate the causes and extent of the loss of value of life insurance policies and pensions suffered by policyholders and pension scheme members following the conversion of Zimbabwe dollar policies to foreign currency in 2009.
Justice George Smith led the inquiry, which found out that most policyholders and pension scheme members were prejudiced during the conversion process and recommended that the affected policyholders and pension scheme members be compensated.
The Pensions and Provident Funds (Compensation for Loss of Pre-2009 Value of Pension Benefits) Regulations, 2023, were gazetted on Friday, September 29, 2023, through Statutory Instrument 162 of 2023.
Insurance and Pensions Commission Commissioner Dr Grace Muradzikwa briefed the media on Tuesday that, following the gazetting of the statutory instrument, the regulator now requires the industry to submit compensation plans for approval.
“If Ipec approves the compensation plan, the insurer or pension fund will be expected to start paying eligible policyholders or pension fund members no later than 30 days after the Ipec approval by March 2, 2024,” she said.
Dr Muradzikwa said the 2009 loss of value has contributed significantly to the low confidence that the industry is currently grappling with.
“It is in this vein that we believe making good compensation will help to restore confidence in insurance and pensions, which is key if the industry is to be sustainable,” she said.
In terms of the compensation roadmap, liable insurers or pension funds are required to submit a compensation plan to Ipec, including the list of eligible policyholders or pension fund members and the compensation amounts, within 90 days after the regulations come into effect on December 31, 2023.
Ipec will then analyze the compensation plan and either approve or reject the proposed compensation plan if it does not meet the expected standard within 30 days after receiving the compensation plan by January 30, 2024.
“After approval of the compensation plan, the insurer or pension fund will publish in the media the names of the members entitled to compensation,” Dr Muradzikwa said.
She noted that industry is also expected to disclose information to the affected members, such as a summary of the actuarial report on the implementation of its approved compensation scheme, the individual member’s compensation amount, relevant pay-out timelines, and the complaints mechanism in place.
Dr Muradzikwa said Ipec expects the industry to ensure that it compensates eligible members to the fullest extent practicable and believes the industry has the capacity to compensate eligible members to the fullest extent practicable.
She said the Commission does not expect non-compliance given that it has involved the industry throughout the exercise.
“However, the regulations have proactively provided penalties in the event of non-compliance. We will invoke the stated provisions, should it become necessary,” she said.