IPEC Goes After First Mutual Life Over Assets Separation Anomaly

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By Alois Vinga

THE Insurance and Pensions Commission (IPEC) has initiated plans to conduct a forensic audit on First Mutual Life (FML), accusing the company of submitting an unsatisfactory report during an assets separation exercise.

In emailed responses to questions by Business seeking clarity on the nature and extent of the way FML had flouted the standard procedures, IPEC said a number of anomalies were observed on several insurance companies.

“The exercise was necessitated by the notable non-compliance by several insurance companies against the afore-mentioned legal requirements, which had the potential to prejudice policyholders in favour of shareholders,” IPEC said.

“With respect to FML, the assessment done by IPEC to date, in verifying the extent to which FML complies with the provisions on asset separation, has warranted an in-depth investigation,” it said.

The insurance regulator said the audit is part of the supervisory interventions to gauge the level of compliance with the above legal provisions.

“The Commission expects the audit to take less than four months after signing of the contract with the appointed. Therefore, the objective of the asset separation exercise is to enforce compliance with requirements of the above-cited legal provisions. The spirit behind these legal provisions on asset separation is to ensure that there is no transfer of assets from policyholders to shareholders and vice versa,” said IPEC.

The exercise is expected to identify assets that may have been misappropriated from policyholders to shareholders or vice versa; quantifying the assets that may have been misallocated and apportioning them to their rightful owners; and enhancing compliance with the legal requirements for asset separation as a way of improving good governance in the insurance and pension sector.