Staff Writer
HARARE: Zimbabwe’s short-term insurance industry finds itself at a strategic variation, with the sector in 2025 demonstrating resilience, driven by a buoyant foreign-currency-denominated premium pool, a reformed regulatory landscape and expanding policy volumes.
But mounting complaints about service delivery and the policy debate around a Road Accident Fund (RAF) highlight the challenges still facing the industry.
A standout trend this year has been the strong performance in foreign currency-denominated premium revenue, a reflection of both economic realities and insurers’ ability to tap hard currency business.
According to the Insurance and Pensions Commission (IPEC), short-term insurers reported foreign-currency insurance revenue of US$114,55 million for the half-year ended 30 June 2025, a 29 percent increase from the previous year’s US$88,78 million.
Foreign-currency policies accounted for roughly 82 percent of total industry revenue, underscoring the sector’s growing reliance on hard currency business amid fears of local-currency volatility.
For the period under review, total insurance revenue stood at ZiG3,72 billion, equivalent to US$139,53 million at prevailing exchange rates, representing roughly 30 percent growth year-on-year.
Ipec Commissioner Dr Grace Muradzikwa attributes the industry’s performance largely to the motor and fire insurance classes, which together contributed about 58 percent of US dollar-denominated revenues.
Motor insurance continues to dominate both revenue and policy volumes, buoyed by legislative requirements for all vehicle owners to hold valid cover, while fire insurance remains critical for property and business risk protection.
As of mid-2025, the industry had 513 019 active policies, an 8 percent increase from the end of 2024, and of these, 453 334 policies (88 percent) were in the motor class.
“This growth suggests rising insurance awareness and compliance, despite broader economic headwinds,” said Dr Muradzikwa.
While premium volumes and active policies are trending upward, complaints against the sector have grown markedly.
According to Dr Muradzikwa, the regulator is intensifying efforts to prompt insurers to improve customer service and claims turnaround time.
“We are closely monitoring complaint trends and working with insurers to ensure that policyholders receive timely and fair settlements,” she told industry stakeholders during a regulatory engagement recently. ]
Road Accident Fund, progressive intent, complex implementation
One of the most consequential policy developments this year has been the initiative to establish a Road Accident Fund (RAF), a state-backed vehicle to provide accident victims with quicker access to medical cover and compensation, addressing longstanding inadequacies in post-crash support.
Mr Precious Shumba, director of the Harare Residents’ Trust, has publicly urged authorities to prioritise fair compensation and citizen welfare in the design of any road accident financing mechanism.
“Accident victims and their families must not be left to navigate delays and out-of-pocket costs; timely support is critical,” he said at a civic forum on transport safety.
The government’s position has been that the Fund is meant to complement, not replace, commercial motor insurance.
Officials emphasise that careful legislative design and broad consultations are underway to ensure the fund’s sustainability and prevent double-burdening motorists.
Ms Alice Shumba, vice-president of the Insurance Council of Zimbabwe (ICZ), believes that while the RAF could coexist with the commercial insurance market, there is a potential existential threat to some short-term insurance players given the sector’s current financial soundness.
She stressed that the industry is already facing liquidity challenges, with many companies heavily invested in prescribed assets such as treasury bills, which can limit cash available to pay claims.
“The fear is that reductions in premium pools could undermine insurers’ claim-paying capacity and exacerbate liquidity constraints,” she said in an interview.
She emphasised that the scale of the RAF reform requires more frequent and deeper engagement between the industry, regulator (IPEC) and policymakers to ensure that insurance companies are not harmed or destabilised by the changes.
Industry analysts support the humanitarian intent of the RAF but caution against rushed implementation.
Mr Tafadzwa Rusike, an insurance analyst said for the RAF to work, it has to be well-structured with clear funding streams that do not erode existing commercial insurance markets.
“Air-pocket gaps or inefficiencies could deter insurers from underwriting motor risk altogether,” he said.
Innovation, inclusion and profitability
Looking ahead to 2026, the short-term insurance sector’s prospects hinge on several key factors. These include balancing premium growth with solid underwriting results.
IPEC’s mid-year report highlighted a modest underwriting profit of ZiG395.93 million (US$14.86 million) in insurance service results, up from US$9.60 million previously, signalling core business strength.
Mr Davison Choeni, general manager of the Insurance Institute of Zimbabwe (IIZ) speaking at the Southern Africa Insurance Indaba 2025, emphasized that the insurance sector including short-term insurance must evolve with changing risk landscapes and economic conditions.
He said insurance professionals stand at the intersection of risk, resilience and opportunity and that the industry must respond with agility, foresight and innovation to meet evolving needs.
Mr Choeni highlighted that the industry should go beyond traditional approaches and embrace new ways of thinking, partnerships and solutions to drive sustainable growth and contribute to national and regional economic development.
For consumers, the industry must offer a mix of expanding foreign-currency products, broader policy options, and heightened regulatory attention to compliance, all encouraging signs for a community that increasingly expects reliability and responsiveness from insurers.
