Insurance uptake remains low

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THE uptake of insurance products continues to be depressed in Zimbabwe as market confidence in the sector remains low, the Insurance and Pensions Commission (Ipec) has said.
In its life assurance industry report for the quarter ended March 31, 2023, Ipec said the depressed uptake of insurance was highlighted by new business accounting for only four percent.
“Traditional life assurance products, which include term assurance, endowment policies, pure endowment and whole life, accounted for a small proportion (5,3 percent) of business generated by life assurers.
“For the traditional life assurance products, no new business was reported, with the existing products being mainly legacy products, which were sold to the market before 2009,” Ipec said.

“The low GPW (gross premium written) generated from new business, which declined from 12 percent reported as of December 31, 2022 reflects the challenges facing the industry due to the volatility in the macroeconomic environment, which limited the uptake of new business due to low disposable incomes and product irrelevance.”
The commission encouraged life assurers to deploy customer-centric product development that meets the needs of the market and restores confidence in the sector.
The life assurance sector reported GPW of $35,9 billion during the quarter under review, an increase of 452 percent from $6,5 billion reported in the first quarter of 2022. In inflation-adjusted terms, the growth was 196,4 percent.
The growth in GPW was mainly attributable to premium adjustments in line with rising inflation as well as new business though on a small scale as the ratio of new business to the total premiums collected was only 4,38 percent.
Additionally, recurring premiums and new business written for the quarter improved in nominal terms by 123 percent and 160 percent, respectively compared to the same period in 2022.
“The two classes which contributed to the significant increase are funeral assurance and group life assurance business,” Ipec said.
GPW for life reassurers grew by 309 percent in nominal terms to $1,09 billion from $267 million in 2023 while in real terms, the increase in GPW was 118 percent.
The life assurance sector reported foreign currency business amounting to US$10,5 million, a 183,8 percent growth from the US$3,7 million reported in the same period last year, with funeral assurance being the major contributor with one entity writing 40 percent of the business.
The life reassurance sector reported foreign currency business amounting to US$0,78 million for the period ended March 31, 2023.
During the quarter, the life assurance sector was made up of 12 direct life assurance companies, four life reassurance companies and 1 425 life agents with one company failing to submit its return for the quarter.
“All the 11 life assurance companies which submitted their returns and all four life reassurance companies reported positions that were compliant with the prescribed minimum capital requirements of $75 million and $112,5 million under SI 95 of 2017, respectively, as of March 31, 2023.
“However, the entities are expected to have systems in place to comply with the risk-based solvency regime under the ZICARP framework whose implementation date was 01 January 2023,” Ipec said.
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