Natasha Chamba, Business Reporter
THE Insurance and Pensions Commission (IPEC) has advised insurance and pension companies to invest more in assets so as to shield policy holders’ savings from the raging inflationary pressures.
IPEC commissioner, Mrs Grace Muradzikwa, said the commission was focusing on mobilising more assets to preserve value for pensioners and policyholders.
“We are encouraging insurance companies to preserve value by investing in assets that lock value. As at 31 December 2018, over 80 percent of life assurance assets were in respect of property and equities while the money market accounted for just over five percent,” she told Business Chronicle.
“This is the trend, which we would like to continue going forward. This, therefore, shows that the industry is cognisant of the need to preserve value.”
IPEC has also proposed early remuneration for pension scheme members so that they can benefit from their savings even before reaching retirement.
Due to the deteriorating economic environment, some schools of thought believe that insurance is now a luxury but the commission insists that the sector is still critical to the economy.
“It is important to note that the role of insurance is to get the policyholder back to where they were before the insured event occurred. To that end, insurance cannot be considered a luxury but a necessity because it helps people to recover from unforeseen events,” said Mrs Muradzikwa.
“It is important to have insurance as it is more critical than ever when there are economic challenges because that way, the insurer pays part or full cost of replacing the lost assets than an individual without insurance who would have to fund the replacement cost on their own.”
Mrs Muradzikwa said despite the economic challenges, the insurance sector had remained resilient in that short-term insurance, which includes motor vehicle insurance, was the major driver of the sector.
“The commission continues to encourage insurers to be innovative and introduce products that are affordable and easily accessible to existing and prospective policyholders,” she said. — @queentauruszw