Insurance penetration ratio targeted at 20% in the next two years

Insurance penetration ratio targeted at 20% in the next two years

Harare – The Insurance and Pensions Commission (IPEC) is targeting to increase insurance penetration ratio to 20% in the next two years from the current 3, 6 % through micro insurance which is largely affordable to low income earners.

Launching the micro insurance regulatory framework, Ipec Commissioner Tendai Karonga said micro insurance is a growth driver for the insurance sector.

According to a FinScope survey of 2014, 70% of the adults in the country are not insured and of the 3% with insurance, 77% of them were in respect if funeral insurance.

Karonga said that shows there is a huge gap on the insurance uptake which needs to be filled.

“In essence ,micro insurance is a growth area, which will increase penetration  ratio from the  current 3,6% as more members of society  can access and afford insurance products that match their needs,” he said.

He added that in Ghana for instance, penetration ratio rose drastically   from less than 5% to more than 20% with the insurance products mostly inked to micro finance and micro pensions.

Meanwhile, Micro-insurance framework is in line with the financial inclusion strategy  which works as a  poverty alleviation  strategy  that also assists  low income household to manage risks by providing   them with  a sense of financial confidence in the face  of significant   vulnerabilities  such as death  ,injury  and illness loss of property  effects of drought  among other issues.

On societal benefits Karonga said micro insurance allows the financial excluded people to be insured and thereby increasing   their financial   security independence.

He added that the distribution channels for the micro insurance will include micro finance institutions, mobile network operator’s church organisations and burial society among others.

“To enhance secure key  stakeholder buy in  the commission  came  up with  a sterling committee that will oversee the implementation of the micro insurance in the country,’ he said.

Meanwhile, government has said the development of the micro insurance framework is a welcome move given the highly informalised nature of the economy.

Permanent secretary in the Ministry of Finance and Economic Development Willard Manungo said micro insurance forms an integral part of the financial inclusion strategy given that there is wide range of products from which adult individuals and households can choose from.