Zimbabwe’s insurance sector to grow on positive sentiment by new Government, Research

Zimbabwe’s insurance sector to grow on positive sentiment by new Government, Research.

Premiums projected a 4.8% year on year growth in next 5 years.

Insrance24 Reporter

HARARE,  Zimbabwe’s insurance markets will depend heavily on the post-Mugabe regime making good on promises to open up the economy, re-engage meaningfully with creditors and crackdown on corruption but  premium growth is expected to increase 4,8% per annum in the next 5 years while a 5,1% projection is anticipated  for the  non life sector.
According to a research by a Fitch research company, BMI, across the course of our five year forecast period, an average growth in non-life premiums written of 5.1% per annum is predicted, taking the total value of premiums to US$277mn in 2021, up from US$224mn in 2017.
“After estimated growth of 4.0% in 2017, we forecast that life premiums will grow by 3.6% in 2018, as monetary conditions remain challenging initially, before accelerating to premium growth of 6.1% in 2019.

While acknowledging significant potential for reform and growth from a depressed base, we offer only a cautiously positive core forecast scenario for the time being, predicting that premium growth will
average 4.8% per annum in US dollar terms over the next five years in the life sector, and 5.1% per year in the non-life sector, with the pace picking up beyond 2018.,” noted BMI

While all forecasts are in dollar terms, given that Zimbabwe’s economy remains dollarized, BMI anticipates that the dollar value of premiums in the non-life sector will rise by 3.9% in both 2017 and 2018, before
moving onto a higher growth path.
”The key downside risk to our current forecasts is that Zimbabwe fails to recover from recession, or enters a fresh downturn within the next two years due to a disappointment of newly raised expectations of a
sustainable recovery,” said BMI
The report went on to note that newly elevated President Emmerson Mnangagwa’s reformist credentials will be put to the test, with no guarantee of success, especially given that he was hardly a sleeping passenger during the poor governance of recent decades.
There are also upside risks to the life insurance (and non-life insurance) forecasts. Zimbabwe has a highly educated population, parts of the country’s physical infrastructure remain in good shape and significant potential could be unleashed in the event that the new regime does re-engage with creditors and the wider international community in reasonably good faith, especially given that economic activity is at a low base,relative to the mid to late 1990s.
“Under even a moderately reformist direction, a reversal of the long-running brain drain would also add to the country’s prospects. On balance, risks to our insurance forecasts are moderately tilted to the upside.

In the event that reform momentum is strong in Zimbabwe and the economy develops more rapidly than currently envisaged, the non-life sector is likely to benefit a little more strongly than the life sector, given the positive impact of higher economic growth on demand for big ticket consumer items, including motor vehicles,’ said BMI


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