The Sunday News
Rutendo Nyeve, Sunday News Reporter
THE regulator of insurance and pensions in Zimbabwe, Insurance and Pensions Commission (IPEC) has issued a directive on funeral assurance products to funeral and life companies that will see them giving grace periods before the arbitrary lapsing of policies.
Last year, Nyaradzo Assurance Company clients sparked an uproar on social media accusing the firm of allegedly ripping off its clients by revoking policies if the assured failed to pay subscriptions for three months, when they would have been paying them consistently, in some instances for decades. That prompted IPEC to issue a statement in October last year acknowledging the concerns.
IPEC promised in line with their mandate of protecting the interests of policyholders to engage funeral assurers through their association, Zimbabwe Association of Funeral Assurers in order to design product and pricing which were expected to culminate in reforms that would ensure the vibrancy and sustainability of the sector and the protection of policyholder interests. IPEC has thus released a funeral products directive with funeral assurance policy reforms.
“The main objectives of the directive is to provide minimum guiding principles to ensure that all the assurance players that offer funeral products have effective systems in the design and distribution of funeral products in Zimbabwe, guide the life and funeral assurance industry on the reforms to be applied to funeral policies and outline the minimum expectations and requirements for the design and distribution of funeral assurance products in Zimbabwe,” said IPEC.
IPEC noted that all funeral policies issued must be accompanied by the schedule stipulated in Section 60 of the Insurance Act.
The schedule specifies grace periods applicable for different periods for which premiums would have been paid.
“The grace periods and corresponding durations in force are as follows. Six months will be given for policyholders with five years or over and less than seven years. Nine months will be given to those with seven years or over and less than nine years.
12 months will be given to those with nine years or over and less than 11 years. 18 months’ grace period will be given to those with 11 years or over and less than 14 years. A two-year grace period will be given to those that have subscribed for 14 years or over and less than 17 years. A three-year grace period will be given to those with 17 years or over and less than 21 years. Four-year grace period will be given to those with 21 years or over and less than 25 years. 60 months will be given to those that have 25 years or over duration in force,” reads the directive.
The directive which becomes operational with effect from 1 July 2023 further directs the maximum limit that all funeral assurance policies must assure, with no minimum amount applicable.
“Each funeral policy covering a single life shall be limited to a maximum sum assured not exceeding an amount of US$6 000 or ZWL equivalent using the prevailing interbank exchange rate. All funeral assurance policies shall not be arbitrarily lapsed without formal communication to the policyholders at least 30 days prior to the date of lapse,” said IPEC.
Meanwhile, all annually renewable policies will have a limit of three years after which they become long term policies with a maturity date and shall have a term not exceeding 25 years from the date of conversion from an annually renewable policy to a long-term policy.
“The policy shall mature at the end of the premium paying term. Effective 1 January 2024, all annually renewable funeral policies that have attained three years in force, shall automatically become long term policies with a maximum premium paying term not exceeding 25 years from the date of conversion from an annually renewable policy to a long – term policy,” said IPEC.
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