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Nobert Musa Phiri*
Muvingi and Mugadza, Harare
Insurance improves the sustainability of an economy and leads to greater rates of growth. Insurance de-risks governments, business and communities. It takes the financial burden of recovery off the taxpayer and boosts economic growth. One way for low–income earners to protect themselves is through micro-insurance. By helping low-income households manage risk, micro-insurance can assist them in maintaining a sense of financial confidence, even in the face of risks. Micro-insurance has the same purpose as traditional insurance – to allow consumers, whether they are individuals or businesses, to transfer their risks and purchase the security they need to live their lives or grow their business. Adopting an enabling regulatory and supervisory framework for micro-insurance is fundamental to the growth of micro-insurance business as an alternative to traditional insurance business.
In June 2017, the Insurance Regulator in Zimbabwe, the Insurance and Pensions Commission (IPEC) launched a micro-insurance regulatory guideline that facilitates the provision of insurance to low income earners. The justification for micro-insurance according to the regulator is for financial inclusion, given that it extends the range of financial products to low income earners. In order to formalise the operation of micro-insurance business, in March of 2018, the Minister of Finance and Economic Development moved to regulate the micro-insurance industry by gazetting Statutory Instrument 39 of 2018, Insurance (Amendment) Regulations, 2018 (No 21) and Statutory Instrument 40 of 2018, Insurance and Pensions Commission (Levy) Regulations, 2018 (No 1). While it is prudent to formally regulate micro-insurance business, it is interesting to note that the Regulatory framework that has been promulgated essentially deals with capital requirements and administration issues relating to registration and levies.
The micro-insurance regulatory framework
Insurance business in Zimbabwe is principally regulated through the Insurance Act;  the Insurance and Pensions Act;  the Pensions and Provident Act;  and the various regulations gazetted by the Minister. The principal regulations dealing with the administration of insurance business are the Insurance Regulations 1989 Statutory Instrument 49 of 1989. Subsequent regulations and, in particular, Statutory Instrument 95 of 2017, Insurance (Amendment) Regulations 2017 (No 19), which deals with capital requirements and calculation of capital for insurers, is important for appreciating the micro-insurance framework. It is against this regulatory background that Statutory Instrument 39 and 40 dealing with micro-insurance was promulgated. Regrettably and worryingly, the regulatory framework on micro-insurance pays attention to administrative functions relating to capital requirements and registration of micro-insurers.
Statutory Instrument 39 of 2018
This Statutory instrument amends Section 3 (1)  of the Insurance Regulations that sets out the minimum capital requirements for insurers. This was through the insertion of Section 3 (1)(f)  which stipulates that US$300k shall be the minimum capital requirement for a micro-insurance company. Such a provision is meant to ensure liquidity and solvency in micro-insurance companies.
Further, the Statutory instrument amends the Third Schedule of the Regulations in Part 1 by inserting paragraph 8, which outlines the registration fee for micro-insurance companies. There is an application fee of US$200 and a registration fee of US$1k to be paid for registration of a micro-insurance entity. This is important as it advocates for the registration of micro-insurance companies. Registration allows the Commissioner to regulate the activities of micro-insurance insurers. Part III  was amended to include the licensing fee for micro-insurance agents. These could be individuals or corporate agents. This ensures that agents/brokers operating in micro-insurance are licensed to operate and regulated by the Insurance Commissioner. The fees for registration of an individual agent are set at US$20 and US$50 for a corporate agent.
Statutory Instrument 40 of 2018
This Statutory instrument amends the Insurance and Pensions Commission (Levy) Regulations, 2016. It amends Section 3  of the Insurance & Pensions Commission (Levy) Regulations by inserting paragraph (m). It stipulates the calculation of levy to be paid in respect to micro-insurance firms. This is important as Zimbabwe has taken steps to ensure the effective regulation of micro-insurance by recognising its existence as a viable insurance market.
Comments on the regulatory framework
The Amendment of the Insurance Regulations and the Insurance & Pensions Commissions (Levy) Regulations is a welcome development in the regulation of micro-insurance in Zimbabwe. It is admitted that regulating the micro-insurance industry through the IPEC guidelines was never adequate and the formal regulation is welcome.
Unfortunately, the positives of the regulation end there. Seeking to regulate the micro-insurance business through dealing with capital requirements and registration is understating the issue at hand and failing to appreciate the impact of micro-insurance business. Regulation of micro-insurance should fundamentally adopt an enabling regulatory and supervisory framework which ensures market stability and provides for consumer protection.  Regulation should also ensure that there are definitions of micro-insurance, the insurable interest, the basis risk and specific requirements, such as no cancellation, technical provisions requirements, product approval processes, reporting, capital requirements, ongoing supervision, consumer protection and market conduct requirements.
Such a regulatory framework should also specifically deal with climate change based micro-insurance and also with privacy and data protection. Surprising and rather worrying is the fact that in the Regulatory framework there is no appreciation of the fact that Zimbabwe is, largely, an agricultural-based economy and has a significant rural population, which is uninsured and which has suffered the effects of climate change. The rural population is mostly made up of dryland farmers who are at the mercy of climate change. Climate change should be considered as an opportunity to take initiative to offer new types of coverage designed to meet the new challenges, either by adapting existing policies or by creating new ones such as index based agricultural micro-insurance. 
Another area of great concern that the framework could have dealt with is privacy and data protection. The changes in the insurance market due to technology have developed it into a market based on systems, procedures and sophisticated data analysis. Micro-insurance is an area in which e-insurance (in particular mobile technology) will be a medium/deliverer of products. Data privacy is an area of law that regulates all stages of the processing of personal data.
Privacy and data protection have become major issues in the global economy. Companies and individuals have become more concerned with how their personal data is handled, stored and transferred. It is pertinent to note that the only law dealing with data protection, or protection of personal privacy, is the Access to Information and Protection of Privacy Act. However, the Act only deals with the prevention of unauthorised collection, use or disclosure of information by public bodies. It is clear, therefore, that private institutions are not regulated and this includes insurance companies. The micro-insurance regulation framework should also have been developed in line with protecting the sensitive and personal information of all consumers of insurance products. This law would deal with principles on data privacy, such as collection limitation, use limitation and security safeguards.
Section 3 of the IPEC guidelines on micro-insurance advocates for a principle-based approach, as opposed to a rule or prescriptive manner of regulating micro-insurance activities. This approach, it is argued, is preferred in order to avoid stifling of innovation. Further analysed from a cost-benefit perspective, the regulation of micro-insurance should neither lead to prohibitive compliance costs for insurance providers, nor add to the total costs of insurance for consumers. However, sight should never be lost that effective regulation is essential for effective consumer protection. Effective consumer protection is a precondition to advance access to micro-insurance as a sustainable risk mechanism.
If Zimbabwe is to achieve a balanced micro-insurance regulatory framework for the delivery of innovative services in its market, cooperation between the regulator, insurers and involved parties should be put in place in order to set out the basis for the development of micro-insurance products and solutions that are relevant to the country and are a valuable service to consumers.
* Nobert Musa Phiri is Attorney of the High Court and Supreme Court of Zimbabwe.
 Lloyd’s 360 Risk Insight Insurance in Developing Countries: Exploring Opportunities in Micro-insurance, at page 6.
 SI 59 of 2005 is also another important regulation dealing with the administration of Insurance business.
 Insurance Regulations, 1989.
 Statutory Instrument 39/2018.
 Part III (no 73 above).
 Insurance and Pensions Commission (Levy) Regulations, 2016.
 Statutory Instrument 40/2018.
 Regulatory and Supervisory Challenges of Index based Insurance, Haykel B Sghaier, The State of Microinsurance – the Insider’s Guide to understanding the Sector, Issue Number 3, 2017 – Micoinsurance Network’s Annual Journal, page 58.
 According to www.Worldometers.info, Zimbabwe’s urban population stands at 31.5 per cent.
 W R Stahel, Insurance and climate change – from reaction to proaction, Geneva Reports, pp 61–71.
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