LOA takes initiative to de-mystify insurance as it stimulate national debate

LOA takes initiative to de-mystify insurance as it stimulate national debate

Insurance24 Reporter 

HARARE, According to the Insurance and Pension Commission (IPEC), almost 70% of Zimbabwe Stock Exchange (ZSE) listed companies are funded by insurance companies and pension funds as institutional investors.

On other hand, at least 77% of Zimbabwe’s adult population are believed 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.

Yes, value was lost, and people are still stuck in that regard, But for how long, and when will the Insurance penetration rate evolve? …Are the regulators doing enough to allay the fears, have the Associations done enough to instil confidence back…What about the companies themselves?

These are some of the many questions the general populace struggle to get the real answers, But is it real that the answers are not there?

It is against this background that the Life Association of Zimbabwe (LOA) has taken the initiative to stimulate national debate about the insurance industry in Zimbabwe.

“Welcome to the Life Officers Association of Zimbabwe (LOA), over the following weeks, LOA will be initiating a national debate about the insurance industry in Zimbabwe.  This is the first of many articles that LOA is going to publish and facilitate dialogue with individuals, entrepreneurs, corporate and various stakeholders on various aspects of insurance.

A journey that we will be taking together, tackling critical issues and setting a platform that will enable us to rebuild and restore the vibrancy of the insurance sector. The sector plays an integral role in the country’s economy recovery,” read part of LOA first installment of the national initiative.

Insurance24 believes this is one of the many initiatives that will carry the regulator’s (IPEC) vision of a 20% insurance penetration rate by 2030 from a current less than 3% ratio compared to other regional peers such as South Africa where the rate is 15% and 20% in Kenya largely driven by micro-insurance.

LOA President Reuben Java earlier in the year indicated that people were 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.

In response to that, 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.

However, with the findings of the commission still not on the public domain, how will that aid in rebuilding and restoring confidence and the vibrancy of the insurance sector. This kind of information asymmetry brings no good in growing the insurance sector in Zimbabwe.

IPEC a few months ago launched a micro-insurance policy framework that entails accessibility and affordability of insurance products up to the lowest earner in the economy. In that regard, we have seen several companies launching low cost insurance products tailor made for the lowest income earner. But what has been the uptake of such products on the market?

There is the Nyaradzo’s Sahwira Lite, which has a minimum cover of 50cents. The Moonlight’s Cash Plus product, We have also seen new entrants in the insurance sector, these include the Netone’s OneCover product and the NMBLife range of products.

The insurance industry comprises of 49 insurance companies among them 12 Life Assures, 9 Funeral Assures, 20 Non-Life insurers, 4 Non-Life Reinsurers, 4 Composite Reinsurers.

As at March 2017, the insurance sector had an asset base of $2.1 bln. It is with such a strong asset base that the industry plays a critical role in economic recovery; as a result, stimulating national debate will help cement the sectors role in the economy.