HARARE, July 31 (The Source) – The funeral assurance industry’s after tax profit for the first quarter to March increased 56 percent to $2.5 million compared to $1.63 million in the same quarter last year, largely on the back of a drop in claims and an increase in premiums written.
In a presentation to the Zimbabwe Association of Funeral Assurers (ZAFA) conference in Bulawayo at the weekend, the Insurance and Pension Commission (IPEC) Commissioner Tendai Karonga said Gross Premiums Written grew by 9.8 percent to $39.81 million from $36.26 million in 2016.
According to Karonga, 75.58 percent of the gross premiums written which is $30.09 million was generated by life offices.
The total assets for the industry increased by 15 percent from $53.04 million to $60.82 million in the three month period, mainly attributable to an increase in investments in funeral service provision infrastructure.
Karonga said there was no separation between management and control as most funeral assurers are owner managed.
“This implies that decision made by the company maybe in favour of the shareholders and at the expense of policyholders in most cases,” he said.
The industry’s prescribed asset ratio is slightly above 1 percent, which is way below the required ratio of 7, 5 percent.
As at 31 March 2017, the prescribed assets investment from the funeral assurers was only around $480 ,000, with some of the companies not having contributed anything at all.
“IPEC takes great exception to this and continues to urge funeral assurance industry players to comply with the 7, 5 percent prescribed asset ratio. IPEC expects ZAFA members to present a plan on how the industry intends to deal with this deficit,” he said.
The current minimum capital requirement for funeral assurers is $1, 5 million while the revised minimum capital requirement will be $2, 5 million once a new Statutory Instrument is published.