Low micro-insurance uptake trends still worrying

Low micro-insurance uptake trends still worrying

Staff Reporter

HARARE, Deteriorating disposable incomes fueled by the current economic status as well as lack of innovation have become the major obstacles in the uptake of micro insurance in Zimbabwe at a time the industry is struggling with confidence issues.

Micro insurance is a mechanism to protect low income people against risk, such as accident, illness, and natural disasters, in exchange for insurance premium payments tailored to their needs, income and level of risk.

Globally, the micro insurance sector is a fast-growing industry with a potentially untapped market of over 2 billion people worldwide.

However in Zimbabwe there is only one micro insurance company out of 2280 insurance and pensions’ entities.

Zimbabwe has been going through a decade long   economy decay which has eroded disposable incomes to drop making life difficult for the majority of people.

The Insurance regulator in Zimbabwe, Insurance and Pensions Commission (IPEC) in June 2017 introduced a micro-insurance framework whose primary objective was to promote the development of micro-insurance in Zimbabwe by establishing a basis for the regulation and supervision of micro-insurance activities and protection.

The regulations sought to ensure inclusion of low-income earners in the insurance industry. A ‘new’ chapter in 2018 has seen the first attempt to formally regulate Micro-insurance by introducing laws which register micro-insurance business.

While micro insurance  targets  low income earners , Director Pension Supervision at Insurance and  Pensions Commission Cuthbert Munjoma said the  industry’s regulator says there a been discouraging lack of innovation around micro insurance products in Zimbabwe.

“The biggest challenge have been low disposable income as witnessed by economic challenges in the economy.  Instances where there are very low disposable incomes people generally find it difficult to insure as insurance will become the least of priorities in households.

We have also seen lack innovation in terms that are tailor-made to suit the needs of   to the informal sector. If they are not tailor-made, it will have a bearing on the uptake,” he said.

Munjoma also said the emergency of Covid 19 which has out restriction on movements for the informal sector also meant their disposable incomes have been affected.

Ipec director of insurance and micro-insurance Sibongile Siwela added that from a regulatory point of view they have been coming up with a framework that facilitates setting up of   micro insurance companies under less stringent requirements as those of conventional insurance companies.

Another initiative have been the approval of micro insurance products under the ambit of conventional companies.

By virtue of  providing  poor and low-income households with the means to protect themselves against the effects of risk, micro insurance must therefore be viewed alongside government provision of basic health services, employment and education, all of which go towards alleviating poverty.