The Insurance and Pensions Commission (IPEC) says it is working with the World Bank to develop a framework for weather based index insurance aimed at expanding the capability of Zimbabwe's insurance industry and increasing financial inclusion.
We hope that by the first quarter of next year we should be able to come up with something. Maybe we can start some consultation with the industry,” IPEC commissioner Grace Muradzikwa told Standard Business.
The World Bank has already given the industry regulator an actuarial consultant to work with.
“So we do not necessarily want money,” Ms Muradzikwa said. “We just want capacity building.”
“Remember it is the insurance companies, which will offer weather based insurance,” she said, adding that IPEC is serving its role of developing the insurance industry. “We are saying what we can do to assist and that’s why we engaged the World Bank to come up with this framework.”
Zimbabwe is an agro-based economy and experts say there is a need for the southern African country to take the issue of agriculture insurance seriously so as to manage the risk that is associated with the adverse effects of bad weather conditions on famers.
The country is still recovering from the shocks of Cyclone Idai and the El-Nino induced drought, which characterised the 2018/19 cropping season resulting in crop failure, livestock and wildlife deaths.
Ms Muradzikwa said that if there are no risk management measures that farmers can adopt in the event of a drought or other natural disaster, it discourages investment in agriculture.
“But I think if we can come up with some kind of weather index based insurance, you will have more people going into farming and they will take up insurance, and in the same vein it will increase financial inclusion.”