BY NATHAN GUMA
THE Insurance and Pensions Commission (IPEC) has urged life assurance companies to innovate and develop long-term products that meet consumer needs, while collaborating with the government to boost uptake, as part of its push to create a regulatory environment that supports savings and financial growth.
This follows a revenue uptick in the life assurance sector during the first quarter of 2024, which was mainly driven by fewer companies.
According to IPEC’s life assurance report for that period, funeral assurance led the sector, accounting for 65.88% of total revenue, followed by group life assurance at 18.6%.
For instance, Nyaradzo Life Assurance Company dominated the sector with a 40.7% market share, driven by funeral assurance as its primary revenue source.
The top five companies generated ZW$397.77 billion, representing 82% of the quarter’s total revenue.
The company also led in market share at 40.7%, with the remaining 11 companies splitting the remaining 59.3%.
Traditional life insurance products, such as term assurance, endowment policies, and whole life, comprised just 6.26% of the business, mostly legacy policies, prompting IPEC to emphasize the need for innovation.
“The Commission remains committed to providing a conducive regulatory environment that fosters appropriate long-term life assurance products,” IPEC stated in the report.
“To this end, we urge life assurers to create innovative long-term solutions that meet consumer demands,” it added.
“There were also engagements with the government to encourage uptake of such products, which are vital for mobilizing long-term savings and financial intermediation in the economy.”
Life insurance firms reported a rise in foreign currency revenue, with Nyaradzo contributing 33% of the industry’s total, driven by policyholders paying premiums in U.S. dollars to avoid frequent reviews and benefit erosion.
Zimnat, Doves, and First Mutual Life also saw revenue gains, contributing 13%, 11%, and 11%, respectively, for the quarter ending March 31, 2024.
However, IPEC said other life insurance companies can improve should they innovate and develop long-term products that meet consumer needs.
In terms of assets, the life assurance sector remained sound, with assets exceeding liabilities.
The sector reported total assets of ZW$8.03 trillion, a 127% nominal increase from ZW$3.55 trillion as of December 31, 2023, which translates to US$364.30 million in United States dollars, down 37% from US$581.52 million at year-end 2023, due to exchange rate distortions affecting valuations.
Quoted equities and property dominated, making up 72.5% of total assets.
“The sector’s asset allocation likely reflects efforts to hedge against inflation and exchange rate volatility, which marked the first quarter of 2024,” the report read.
Life reinsurers reported assets of ZW$94.35 billion as of March 31, 2024, up 97% from ZW$47.93 billion at the end of 2023.
In U.S. dollar terms, their assets were approximately US$4.28 million, a 37% drop from US$6.8 million in December 2023, also due to exchange rate fluctuations.
Money market investments led reinsurer assets at 32%, followed by quoted equities at 29%.
