Around a third (34%) of Zimbabweans are insured, as citizens lack confidence in insurance products owing to loss in the value of savings as a result of hyper-inflationary legacy issues while unemployment and COVID-19 pandemic have also added to the industry's woes, the insurance and pensions regulatory body has said.
Among the 34%, the majority have plans with insurers which offer funeral life cover, reported News Day citing the Insurance and Pensions Commission (IPEC).
Ms Grace Muradzikwa, head of the commission, said that the authority conducted a baseline study to assess the performance of the sector in the first quarter of this year.
She said, “There is low uptake of insurance products, with a recent baseline survey revealing that only 34% of the population in Zimbabwe have insurance of some sort, 76% of which have funeral assurance policies. This is due to a number of issues like insurance fraud, inflation and liquidity challenges, among others.”
She said that the pensions sector was also facing challenges due to unemployment because of company closures resulting from the global coronavirus pandemic.
“There is reduced disposable income owing to company closures, retrenchments and lack of formal employment opportunities that has seen a spike in contribution arrears to $887m and a poor investment climate,” she said.
The commissioner also said that bank closures have affected the insurance and pensions sector. The COVID-19 pandemic has also added to the industry’s woes.
“Because of COVID-19, there is reduced uptake of insurance and pensions products leading to contribution arrears; reduced rental income as tenants are requesting for rental holidays or discounted rentals. There are also long turnaround times in processing benefits and increased expenditure to capacitate employees from working from home,” Ms Muradzikwa said.
“Notwithstanding the macroeconomic challenges and the global COVID-19 pandemic, the industry remains resilient as indicated by the continued operations, paying of claims and benefits even during COVID-19- induced lockdowns.