The Insurance and Pensions Commission (IPEC) has launched a revamped solvency management system for the insurance industry.
Dubbed Zimbabwe Integrated Capital and Risk Programme (ZICARP) Framework, the new system aims to, among other objectives, improve consumer protection and assurance to policyholders and beneficiaries, says IPEC in a statement.
ZICARP also provides incentives to insurers to measure and properly manage their risks, which enables them to absorb significant unforeseen losses.
The framework introduces a principle-based approach to regulation, moving away from a rules-based approach, to ensure better allocation of capital resources in insurance firms, align supervision of all insurance entities and make the sector attractive to investors.
The launch of the framework on 22 June 2021 is a culmination of the work IPEC began in 2015. Upon the launch, insurance companies will begin a phased implementation of the framework.
Insurers are expected to report on ZiCARP from 2022 onwards. ZiCARP is split into three pillars:
quantitative aspects where there is a need for insurance entities to determine Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR);
Own Risk and Solvency Assessment (ORSA) that is expected to be an integral part of business strategy and must be considered when making strategic decisions;
disclosure requirements under which, various returns will be submitted quarterly and annually to the regulator.