ONLY 34% of Zimbabweans are insured, as citizens have lost confidence in insurance products owing to loss of savings value as a result of hyper-inflationary legacy issues while unemployment and COVID-19 pandemic have also added to the industry’s woes, an insurance and pensions regulatory and monitoring body has said.

By Tatenda Chitagu

Among the 34%, the majority of insurers are in the funeral life cover.The shocking revelations came after The Insurance and Pensions Commission (Ipec) conducted a baseline study to assess the performance of the sector in the first quarter of this year.

During an online meeting with journalists early this week, Ipec commissioner Grace Muradzikwa said the majority of citizens were afraid that their claims would lose value due to recurrent runaway inflationary pressures.

“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 are in respect of funeral assurance policies. This is due to a number of issues like insurance fraud, inflation and liquidity challenges, among others,” she said.

Muradzikwa said the pensions sector was also stewing in a hotchpotch of challenges due to unemployment because of company closures spawned by 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 $887 million and a poor investment climate,” she said.

She said $196 million lies unclaimed by 153 000 members who are yet to process their benefits.

The Ipec commissioner said bank closures saw the insurance and pensions sector losing out, as well as hyperinflation from 2009 to 2019 that eroded value of the contributions, the outbreak of the global COVID-19 pandemic had also added to the industry’s woes.

Many pensioners who claimed their benefits during the hyper-inflationary era of 2007-2008 had all their savings reduced to worthless wades of Zimdollar notes, while some failed to withdraw the money from their banks.

“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,” Muradzikwa said.

However, Muradzikwa said the industry was resilient in the face of the challenges after posting an increase in asset base by 843%.

“Notwithstanding the macroeconomic challenges and the global COVID-19 pandemic, the industry remains resilient as indicated by the continued operation, paying of claims and benefits even during COVID-19- induced lockdowns.

“The insurance sector paid about $726 million in claims from April to June 2020 while the pensions sector paid benefits worth $483 million from January to June 2020. The pensions sector had growth in asset base, seeing an increase of 843% from June 2019 to June 2020, which is above the June annual inflation rate of 732%,” she said.

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