About 77% of Zimbabwe’s adult population uninsured, as hyperinflation period still haunts them
HARARE, At least 77% of Zimbabwe’s adult population do not have any form of insurance cover with majority still stuck in the aftermath of the hyper-inflationary period where they lost value in their savings and cover.
This has culminated into the current state of the low insurance penetration ratio which is below 3% in Zimbabwe, compared to other regional peers such as South Africa where the rate is 15% and 20% in Kenya largely driven by micro-insurance.
Life Offices Association of Zimbabwe (LOA) President Reuben Java at an insurance workshop held by Zimselector.com in Harare said of the insured population, about 77% are on funeral cover, compared to other facets like health cover.
“People are still caught up in the aftermath of the hyper-inflationary era where their insurance savings were wiped out hence failing to cushion themselves and the next generation.
“Our insurance cover rate is very low and we must be very embarrassed by it. People are worried about a decent burial but the problem with that is, it does not transfer wealth to the next generation,” he said.
In 2015, President Mugabe set up a commission of inquiry to probe the conversion process used to convert pensions and insurance benefits following dollarisation of the economy in 2009.
This followed concerns by pensioners that their pensions and insurance benefits were undervalued during the switch over from the Zimbabwean dollar to the US dollar. The commission one of its major tasks was to establish fully the total value of pensions, as at December 31, 2006 and as at March 31, 2009.
These legacy issues emanating from the conversion of insurance and pension policies from Zimdollar to US dollar values continued to undermine the Insurance and Pension sector resulting in low compliance to minimum capital requirements.
In his 2016 National budget Finance Minister Patrick increased minimum capital requirements for the sector which should be met up to December 2017. The minimum capital requirements were reviewed in that the Short Term Insurers be capitalised at $ 2 500 000 from $1.5 mln, Life Assurance at $5 mln from current $2 mln and Funeral Assurance from $1.5 mln to $2.5 mln.
Meanwhile, Java said the insurance industry has seen an influx of new players who have somewhat succumbed to the pressures of the economy, failing to pay claims and urged such players to remain transparent.
“We are confident that the regulator will continue to monitor them,” he said. Java added that insurance companies hold nearly $4 billion, positioning the sector as a potential lead in the development of the economy.