Compensation Plans Required for Zimbabwean Insurance Firms to Address 2009 Losses

Insurance firms in Zimbabwe have been given a deadline by the Insurance and Pensions Commission (IPEC) to submit compensation plans in response to the 2009 loss of value experienced by policyholders and pensioners. These plans must include a comprehensive list of eligible policyholders and pensioners, along with the corresponding compensation amount for each individual. Starting in March, policyholders will begin receiving their compensation, as stated by IPEC Commissioner Grace Muradzikwa.

By December 31, 2023, insurance companies and pension funds are expected to submit their compensation plans to IPEC. Within 30 days of receiving the plans, IPEC will review and either approve or reject them, with a deadline of January 30, 2024. Once the compensation plans are approved, the names of those eligible for compensation will be made public through the media. The disbursement of compensation to eligible policyholders and pension fund members is anticipated to commence on March 2, 2024.

This recent development follows the issuance of compensation regulations by the government and addresses the estimated losses of over US$3 billion in investments during the currency conversion process in 2009. The compensation initiative aligns with the recommendations made by the Justice George Smith-led Commission of Inquiry, which thoroughly examined the conversion of insurance and pension values.

The insurance and pensions industry in Zimbabwe has been dealing with a crisis of confidence, stemming from reduced values policyholders and pensioners received after the adoption of the multicurrency system. Analysts believe that providing compensation for the losses incurred in 2009 will go a long way in restoring trust and confidence in the insurance and pensions sector.

In order to address broader concerns and improve the sector’s overall stability, several bills are being enacted into law. These include the Insurance Bill, Pension and Provident Bill, and IPEC Bill. As part of these reforms, the Commission of Inquiry recommended the establishment of a Policyholder Protection Fund and the strengthening of IPEC’s regulatory capacity. These institutional changes aim to enhance public confidence in the insurance and pensions industry.