Online Reporter
Nelson Gahadza
AS Zimbabwe extends agricultural insurance across 60 rural districts, industry leaders caution that the initiative’s success is threatened by a fundamental misunderstanding of insurance’s role in climate resilience.
Despite growing investments from the Government, insurers and development partners, agricultural insurance uptake remains low. Many farmers misunderstand the purpose of these policies, leaving them vulnerable to weather-related losses.
Many continue to view insurance as an investment that should deliver annual returns rather than as a financial safety net that provides protection when disaster strikes.
With climate change bringing more frequent droughts, erratic rainfall and other extreme weather events, insurance experts say improving financial literacy has become as important as expanding insurance coverage.
They warn that without sustained awareness campaigns on the importance of insurance, misconceptions could slow adoption rates and undermine Zimbabwe’s flagship climate adaptation initiatives.
The issue came under sharp focus during a recent payout event under the Farmer’s Basket Insurance Scheme in Buhera district. At the occasion, Government officials and insurance executives stressed that increasing insurance penetration requires more than introducing new products.
It also demands changing long-held perceptions about the role and value of insurance.
Agriculture is the backbone of Zimbabwe’s economy; it drives employment, industrial growth and food security.
It accounts for roughly 11 to 20 percent of gross domestic product (GDP) and provides livelihoods for about 60 to 70 percent of the population.
Insurance Council of Zimbabwe (ICZ) agricultural cluster chairperson Mr Cuthbert Masukume said misconceptions about insurance continue to undermine efforts to increase uptake, particularly in rural communities.
“Some farmers believe that once they insure for US$300, they are automatically entitled to receive US$300 regardless of the farming outcome. Insurance does not replace good farming practices,” he said.
“It only responds to insured events such as drought or excessive rainfall under the terms of the policy.”
His remarks highlight a broader challenge confronting insurers across many developing agricultural economies, where financial literacy has not kept pace with the introduction of innovative insurance products.
Unlike savings or investment products, insurance is designed to transfer risk rather than generate guaranteed returns.
However, many first-time policyholders expect compensation every season simply because they have paid premiums, creating unrealistic expectations that can ultimately erode confidence in insurance products.
Insurance industry expert Mr Garikai Madziva said many farmers still misunderstand the fundamental purpose of insurance.
“The gap between expectation and understanding is widening. While insurance is designed to provide a safety net against risk, many farmers perceive it as an investment scheme that should produce annual returns,” he said.
This misconception, he added, has contributed to fluctuating uptake, mistrust and reduced willingness to subscribe, even as climate change intensifies and weather patterns become increasingly unpredictable.
“The need for robust insurance awareness and clear communication on premiums, payouts and risk coverage has become more pressing than ever. Education remains the missing ingredient in efforts to expand agricultural insurance,” he said.
Evidence of this challenge is already emerging.The director of Business Development in the Ministry of Lands and Rural Development, Mr Abraham Mashumba, acknowledged that, while the Farmer’s Basket Insurance Scheme had made encouraging progress, coverage remained limited.
The programme currently operates in 10 districts and selected wards across the country.
Mr Mashumba said the Government would continue working closely with insurance companies, regulators and development partners to increase both awareness and participation.
“Wider insurance coverage will be critical as Zimbabwe strengthens resilience against climate-related shocks while pursuing national food security objectives,” he said.
The agricultural index insurance initiative has become one of Zimbabwe’s flagship climate adaptation programmes.
Launched in Goromonzi in 2023, the pilot project brought together the Government, the ICZ, the Insurance and Pensions Commission (IPEC), the International Finance Corporation (IFC), AFC Insurance and several development partners.
Unlike conventional insurance, index-based insurance uses objective weather indicators, such as rainfall measurements, to determine whether payouts should be made, rather than relying on individual loss assessments.
Its broader objective is to protect smallholder farmers against climate shocks, strengthen household resilience and safeguard agricultural production.
Since its launch, the programme has expanded to several areas, including Buhera in Manicaland province, Bindura in Mashonaland Central, Hurungwe in Mashonaland West, Gokwe South in Midlands, Chiredzi in Masvingo, Umguza in Matabeleland North and Bulilima in Matabeleland South.
The ICZ sought to enrol 50 000 smallholder farmers during the 2025/2026 agricultural season, more than doubling the 20 400 farmers covered during the pilot phase.
