Zimbabwe: Majority of gross premiums denominated in foreign currency to deal with hyperinflation
Source: Middle East Insurance Review | May 2023
The insurance sector in Mozambique has denominated over 70% of the gross premium underwritten in foreign currencies as hyperinflation rages in the country.
This information was provided by Insurance and Pensions Commission (IPC) head Grace Muradzikwa, in a recent mentorship programme.
The insurance sector’s business underwritten in a foreign currency reached $146m at the end of 2022, recording a 59% growth when compared to 2021 figures.
In Zimbabwe dollar terms, the industry recorded a 353% surge in 2022 with premiums underwritten amounting to ZW$173bn for the year.
Dr Muradzikwa said, “The insurance sector has largely dollarized with 65-70% underwritten by this sector being in the US dollar. It’s really speaking to the value preservation issue. In the hyperinflation era, you will need to be reviewing your assets frequently in order to keep in line with inflation.”
She said policyholders now preferred to insure their assets in foreign currencies to ensure there is no need for constant review of premiums.
In 2020, the government implemented regulations that allow the sector to carry out foreign-currency business to help the insurance market hedge contributions, investments and assets against inflation. M