Insurance industry thrives despite headwinds
ZIMBABWE’S insurance industry has recorded growth across its various sub-sectors, namely funeral insurance, short-term insurance and reinsurance sectors despite facing significant headwinds in a hostile operating environment.
Emerging from the Covid-19 pandemic, which had a significant impact on business between 2020 and 2021, and whose effects are still being felt, local insurers have recorded an uptick in the uptake of insurance policies.
Commenting on the performance of the funeral insurance sector, Zimbabwe Association of Funeral Assurers (Zafa) president Arthur Mukasi attributed the recent growth of the sector to the increase in the uptake of various funeral assurance products in 2022.
“There are a variety of funeral assurance products tailor made to suite clients’ requirements, for example, products at micro-insurance level where affordability of the products has made it possible for more people to participate, especially in the informal sector,” he said.
According to Zafa, the country’s insurance penetration rate is currently around 3.6%.
In the period ending September 2022, there was improvement in gross premium written (GPW) for the short-term insurance industry, with insurers recording 359% growth for Zimbabwe dollar premiums and 26% for US dollar premiums compared to the same period in 2021.
During the same period, the reinsurance sector recorded 364% growth for Zimdollar premiums and 38% for US dollar premiums.
However, Mr Mukasi added that high inflation rates and relatively low disposable incomes continue to pose challenges to the industry as some of the policyholders struggled to pay their premiums for funeral polices.
Speaking to The NewsHawks, the Insurance Council of Zimbabwe (ICZ)’s marketing and publication relations consultant, Ringisayi Batiya, said only those policyholders who had US dollar insurance covers are better protected from the negative impacts of inflation.
“Policyholders with Zimbabwe dollar policies were being encouraged to consistently review their covers in line with foreign exchange rate movements to avoid under-insurance,” said Batiya.
The ICZ official said low disposable incomes have affected the insurance industry because consumers continue to disregard insurance as a priority expense.
“Due to the economic hardships faced by the consumers, insurance continues not to be a priority expense. For the general public, uptake is high in the statutory third-party motor insurance,” she added.
Although the confidence in the insurance industry increased, the ICZ said there was a need to innovate the traditional insurance products offered in the industry.
“There is need to innovate and offer relevant and affordable products in response to emerging needs and habits of consumers.
“This process will also aim at providing products that encourage financial inclusion of low-income earners,” said ICZ.
In the contemporary era, technology is increasingly playing a key role in enhancing efficiency and scaling business.
In line with the aim to expand financial inclusion, the Insurance and Pensions Commission (Ipec) announced the start of a Bima lab project at the virtual launch of the 2023 Journalism Mentorship Programme held on 10 March 2023.
“This is a lab being facilitated by FSD Africa, where we have invited the industry stakeholders to come up with Insurtech-led innovations to serve the underserved,” said Ipec commissioner Grace Muradzikwa.