IPEC targets 20% insurance penetration

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THE Insurance and Pensions Commission (IPEC) wants insurance penetration to reach 20 percent next year from the current level of about five percent. This comes as insurance is viewed as a luxury and unaffordable to many due to subdued disposable incomes.
Zimbabwe’s insurance penetration rate, which reached a high of 10 percent in the early 1990s, has been declining over the last two decades, with official figures showing that it dropped to a low of 1,5 percent in 2015.
Speaking at the launch of Econet’s new short-term motor vehicle insurance product last week, IPEC board chairperson Lynn Mukonoweshuro said the commission plans to push the industry to 20 percent penetration by 2019.
“As IPEC, we aim to contribute towards growth in penetration of the insurance industry in Zimbabwe, which is currently very low at about five percent,” she said.
“I believe that if we all play our part we can achieve this,” said Mukonoweshuro.
Speaking at the same event, Cassava FinTech Zimbabwe chief commercial officer Givemore Jojo said Econet found in a study that some of the reasons Zimbabweans have were shunning insurance included trust, poor education on the matter, and unaffordability.
“We wondered why there is such a low penetration rate and we went into the market to find out. We found that some people do not understand why they should be paying insurance at all … some say they owe ZINARA (Zimbabwe National Road Administration) and cannot clear the debt … some say that they do not get value for their money,” he said.
“Another common reason was that some believe that most insurers are crooks and bogus. Some also said the premium payments are unaffordable and are not flexibly scheduled.
“There is also the fact that may be quite a hassle to insure. You may need to drive somewhere and wait in a queue. Who really has the time for that?” Jojo asked.
Micro-insurance has emerged as the leading driver of insurance penetration in Zimbabwe. IPEC says over two million Zimbabweans are subscribed to various micro-insurance products largely as a result of their affordability. Several life assurers and health insurers have, over the past two years, developed micro-insurance products that cost from as little as 50 cents.
Last year, IPEC rolled out a micro-insurance framework to create an enabling environment for the local industry in a bid to boost insurance penetration.
Mukonoweshuro said: “We are conscious of the fact that the biggest driver of insurance inclusion has been micro insurance via the mobile phone.” newsdesk@fingaz.co.zw