ESTHER MSETEKA, Lusaka
THE Pensions Insurance Authority (PIA) has advised insurance companies that have not yet met the minimum capital requirement to consider merging or listing on the Lusaka Securities Exchange (LuSE) to avoid closure before the October deadline.
In 2015, Government signed a statutory instrument to allow insurance companies to 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 the threshold for brokers has been increased to K100,000 from K50,000.
On Monday, Minister of Finance Felix Mutati said the October 2017 minimum capital requirement deadline for insurance companies will not be extended.
PIA registrar Martin Libinga said out of 33 insurance entities, only 16 have met the requirement aimed at making the industry competitive and robust.
In an interview with journalists in Livingstone on Tuesday, Mr Libinga said the increase in capital will help players in the sector to address issues that dent the industry such as delays in payment of claims.
“So far we have [a total of] 16 companies that have met the required minimum capital, representing 50 percent. Some of them have already 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 actually moved, but we are hoping that come October, we will not see any entities go under [close].
“We do not thrive in seeing companies close down [and] we are hopeful that the business entities can begin to consolidate, to merge and even to list on LuSE to try and raise capital so that they can remain afloat, come October,” he said.
The regulator aims to address issues such as standards on settlement of claims and guideline on internal dispute resolution, among others.
“Next year will be very interesting because at that time, we are hoping that everyone would have met the minimum requirement. Secondly, we are hoping the new insurance law will be in place to help us deal with some of the issues that we are grappling with in the industry such as premium collections,” Mr Libinga said.