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Reform .

penslon, insurance sectors

Martin Tarusenga ance companies that are "prieither turned a blind eye right Own Correspondent vately" owned by three or four up until the pension and RFHL ension fund member '-, larger holding companies and in crisis and/or-they were just not ship' and insurance a loose regulatoryframework, competent enough to. notice .policyholders can now that is already being discredited the gravity of the irregularities, make reasonably fair assessby pensioners. Most of them are' and/ or they stuck to the code of ments of whether or not ina result of the spate of demutusilence. surance companies and their alisation of mutual life insurWith no obligatory per-. regulator should- be held to ance companies in Zimbabwe. formance measurement, the account for lower-than ex. Empirical evidence that public will only notice when pected pension and insurance privately owned (proprietary) a crisis befalls. In the process entitlements - thanks to the Insurance companies are oploss 'of value for pension fund .media efforts. erationally more efficient and membership .and policyholders Apart from the largelyflawed provide higher returns to their is perpetuated - hence the low defensive stance taken by the policyholders than mutual setvalues that every pensioner is Zimbabwe Association of Penups, fuelled this demutualisacrying foul about. There is nothsion Funds, the conduct and/or tion. Evidence in Zhnbabwe. ing to stop the other holding "body language" of insurance that the latter is actually the companies from.doing the same companies and' the Insurance case is however lacking. . away from public scrutiny. and Pensions, Commissioner Objective and comparable ~The obsCuritY~ihsurance (Ipec), their-regulator - in the transparent assessment of in" business management is exacface ofthe allegations - has apsurance company investment erbated by a lack of adeqnarely patently been one of reticence, performance, relative to the competent insurance bug essentially. company's obligations to penanalysts who can There is no question that it is sion fund members and policyassess insurance business written all over their "actions" holders and incorporating the formance for the benefit 0{ .they had a direct part in preju - expenses the insurance compastakeholders including pension 'dicing pensioners of. their ennies run in managing pension fund me~rship, titlements. The involvement of and insurance funds isevident- It turns out that while the Afre's First Mutual Life in funds ly lacking. grounds to move to proprietary misappropriation by Patterson Transparent and comparable insurance business manageTimbaat Relxaissance Financial reporting by insurance comment is' empirically correct in Holding (RFHL),is only a tip of panies in the key areas of pereconomies with effective transthe iceberg in a huge pension formance in underwriting and' parent insurance business regand insurance funds scandal investment activities; operating ulatory '"andsupervisoly framethat may open up fully when it and other expenses, the level of works, in Zimbabwe this JooI3 is too late. 'capital held relative to the risks like this was a strategy to bring _It is, however strange the taken, has become something pension and insurance funds same management and malof a laissez faire in the insurunder black-box management practices that saw pensioners ance industry in Zimbabwe. -rand to enable looting. being prejudiced are still being . The demutualised comIn sum it is a tolerant penapplied to what remains of pen - panies have progressively exsion and insurance. legislation that has allowed a monopoly sion and insurance funds. hibited a corporate character To date,the same insur- . where their business practices' pension and, insurance manance business management can are maintained as black-box is- 'agement. still look for new money from sues and there is a veiled desire The monopoly management unsuspecting members of the to maintain this state of affairs has in turn impeded transparpublic by soliciting for more as manifested by the defensive ency' accountability, competipension contributions and sellstances they have taken in the tion,innovation and efficiency in the two industries. jng more insurance policies. past. - Nothing short of drastic Apart from the announceIndeed the Institute of Charmenf of the Ipec board chair - tered Accountants of Zimbabwe measures will be required to undo' the current repressive person at the Africa Insurance has in the past. raised its conpensions and insurance manOrganisation conference, that cerns about the comparability agement culture. Acts would be reviewed, there of accounting numbers pubhas been no direct response to lished by insurance companies Martin Tarusenga is a board refute the allegations made by in Zimbabwe. member of Zimbabwe Penthe pensioners - another in-. "The run up to the crisis at sions and Insurance Rights,; stance of reticence, but neverTimba's RFHL,and Afre, where theless lending support to pen -First Mutual Life Assurance is telephone; +263 (0)4 883057; Mobile; +?63 (0)772889716 sioner allegations. _ the largest- and only company Opinions expressed herein The alleged collusion could "of Significance in til.e Holding, be far worse than apparent saw several news items about are those of the author and do not represent those of the OIwhen it is considered at least, ,potential irregular management 90% of pension funds in .Zim- "In this holding - but the "pro- . ganjsations tiua the ilII1hoc repb'!l>w,e,_are. managed j~ .insur-,- fessionals"