News Africa13 Apr 2020

Zimbabwe:Regulator gives policyholders choice of paying insurance premiums in foreign currencies

13 Apr 2020

Approval for insurers to use free funds in domestic transactions during the current coronavirus crisis should not be misconstrued as authorisation to issue foreign-currency denominated insurance policies, the Insurance and Pensions Commission (IPEC) has said.

As part of measures to mitigate financial vulnerabilities caused by the COVID-19 pandemic, the government recently issued a statutory Instrument (dubbed S.I 85 of 2020) to facilitate payment for goods and services chargeable in Zimbabwe dollars, in foreign currencies using free funds at the prevailing rate on the date of payment, reported The Chronicle.

As a result of this policy guideline, the Commission said, in a circular sent to all insurers and insurance brokers, that policyholders may now pay their insurance premiums in foreign currencies using free funds at the prevailing exchange rate on the date of payment.

“This means that in respect of policies that are denominated in Zimbabwe dollars, policyholders may pay their premiums in foreign currency,” said Mrs Grace Muradzikwa, insurance commissioner.

“For the avoidance of doubt, the provisions of S.I 85 should not in any way be misconstrued as authorisation to issue foreign currency denominated policies.

Instead, policyholders have an option to pay their premiums, which are chargeable in Zimbabwe dollars, in foreign currency using free funds, she clarified.

Thus, with the exception of policies that are expressly denominated in foreign currencies as authorised in a 2019 statutory instrument, all other policies shall remain Zimbabwe-dollar denominated policies.

The IPEC also said, “Policyholders who wish to continue paying their premiums using the Zimbabwean dollar can continue to do so as normal.”

The regulator also stressed that the measures outlined in S.I 85 are a reprieve to the adverse impact of COVID-19, and are expected to be reviewed when the situation improves.

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