Fri, 23 Jun 2017 11:09:25 +0000
By BUUMBA CHIMBULU
INSURANCE entities should consider listing on the Lusaka Stock Exchange (LuSE) as a way of raising sufficient capital required to continue operations before the October 2017 deadline, Pensions and Insurance Authority (PIA) registrar, Martine Libinga, has advised.
Insurance entities have until October 2017 to meet the increased minimum paid-up capital failure to which they risk losing their licenses.
In 2015, Government issued Statutory Instrument (SI) no. 71 of 2015 directing insurance companies increase their paid-up capital to the minimum of K20 million from K1 million; long-term and general insurers to K12 million and K10 million respectively from K1 million, while for brokers it stands at K100,000 from K50,000.
And Mr Libinga, in an interview on the sidelines of the 2017 insurance annual conference in Livingstone, advised the entities to consider listing on LuSE so that they could remain afloat come October 2017.
Mr Libinga also advised the entities to consider merging if they could not raise the minimum capital requirement.
“Some of them have started building their capital and we are hoping that by October they would have met the required capital.
“However, there are some that have not moved but we are hoping that come October we will not see entities go under. We do not delight in seeing companies close down, so we are hoping that the business entities can start thinking about issues of consolidation and merging,” he said.
He said 16 insurance entities out of 33 had so far met the capital requirements as of 2017 first quarter.
Mr Libinga explained that when an entity was properly capitalised, some of the issues such as the inability to pay claims that dented the industry would be minimised.
“Claim payments which is a challenge for some policy holders will be minimised if entities are well capitalized. It is very clear from the Minister of Finance Felix Mutati that there will be no extension; so the entities must ensure that they have recapitalised by October,” he said.
Meanwhile, Mr Libinga said 2018 was brighter for the industry especially if the Insurance Bill was enacted.
“2018 will be an interesting year because at that time we are hoping that everyone will have met the minimum requirement and we are hoping that the law will be in place.
“There are other provision in the Bill which I think will help us deal with some of the issues we are grappling with in the industry, such as premium collections,” he said.
