Chronicle Editor
Prosper Ndlovu
DESPITE exhibiting resilience in the face of the devastating Covid-19 pandemic, Zimbabwe’s insurance and pensions sector continues to face numerous challenges that require industry players to be adaptive and innovative.
Strengthening business growth is imperative for the sector given its significance to attainment of the ambitious United Nations global sustainable development goals (SDGs) by 2030.
The sector’s operations have considerable relevance to key economic elements such as long-term investments, financial intermediation and capital markets developments. These have a bearing on targeted global SDGs, to which Zimbabwe has made commitments.
They encompass the drive to end poverty for all, good health and wellbeing, quality education, gender equality and access to clean water and sanitation, among others.
With a combined gross premium written revenue at $7,61 billion as at March 2021 from $1,42 billion last year, and a combined asset base valued at $61,4 billion, the insurance sector alone holds critical resources to unlock wider economic opportunity.
Similarly, the pensions sector had accumulated contributions of $2,86 billion as of March 2021 from $440 million in March last year, with an asset base clocking $177,12 billion from $29,81 billion, according to Insurance and Pension Commission (IPEC),
As a source of such critical savings and, in line with Government’s five-year economic blue-print, the National Development Strategy (NDS1-2021-2025), the insurance and pensions sector is expected to play a critical role in national economy development.
Incredible changes have recently hit the sector, some of which were long overdue and point to a more disruptive future, which necessitates important shifts in business modelling.
In Zimbabwe, insurance penetration is worryingly on the lower side, at less than three percent, a trend largely attributed to low consumer confidence due to loss of value linked to hyperinflationary legacy issues, says IPEC.
Reduced disposable incomes, largely due to company closures, retrenchments and lack of formal employment opportunities, are also straining the viability of the pensions sector.
IPEC Commissioner, Dr Grace Muradzikwa, has said the outbreak of Covid-19 and its disruption of supply and labour value chains, has compounded the situation — leading to waiver of contributions by employers in affected sectors. High levels of premium debtors and insurance fraud, also continue to exert pressure on the insurance and pensions business space.
Amid this chain of challenges, the insurance and pensions sector has been urged to embrace the ‘disruptive’ digital innovation towards enhancing transparency and opening new avenues for improved business. Digitalisation presents a window of opportunity to rejuvenate business agility, Dr Muradzikwa admitted in a recent presentation during a media training seminar jointly organised by IPEC and NSSA.
Industry players are already grappling with digital mainstreaming and this has “resulted in restructuring of key business functions . . . and operational efficiency,” she said.
The need for insurers to successfully engage more customers via richer digital platforms and derive higher-impact products and services cannot be overemphasised. For instance, Maisha Health Fund, Cassava Smartech Zimbabwe’s health insurance unit, recently turned its medical aid cover digital by rolling out USSD-based service registration to the public via mobile phone.
Besides enhancing more dynamic operations the digitally innovative and convenient service has enabled Maisha to appeal to a wider business audience and facilitate a safer and lower-risk environment, says Mr Eddie Chibi, Cassava Smartech’s Chief Executive Officer.
Access to healthcare services could be enhanced through paperless, digital solutions that minimise cost and risk to members by restricting movement and physical contact, he added.
“As a group, we are committed to serving where the need is greatest, and we believe through such innovations we will be able to widen access and at the same time ensure convenience, safety and healthcare affordability to many, using technology,” he said recently.
Scope for digital innovativeness in the pensions and insurance sector could be higher, drawing inspiration from strides the country has achieved so far in establishing a sound e-commerce infrastructure base.
A latest World Bank Zimbabwe digital diagnostic report already shows Zimbabwe has made significant digital advancements, including mobile money revolution, resulting in about 7,1 million mobile wallet holders in a country of about 15 million.
It further notes the country has a relatively well-developed digital payment system, where 96 percent of all transactions in the country’s formal sector are conducted through digital means.
Due to the largely informal nature of the economy, limited gains are derived from digital transformation growth potential, said the World bank. Recommendations for strategic investments in digital skills and infrastructure, as well as accelerating creation of digital platforms and entrepreneurship, have been made.
This is more imperative for the diverse insurance and pensions sector who should design product services that speak to the restructured economic base and move beyond formal client schemes to explore more access opportunities for the previously excluded groups, including farmers, SMEs and those in the informal sector.
Buttressing the digitisation and innovation drive, multilateral auditing firm, Ernst & Young Global Limited (EY) has highlighted five digital transformation opportunities that insurers could harness to unlock new sources of revenue and enhance customer experiences.
Citing growing incidents of unforeseen natural catastrophes linked to extreme climatic conditions and their impact on macro-economic stability, widening gaps in savings and social protection, as well as attendant shift in demographic patterns, EY has urged insurers to develop solutions that protect people and industry while helping them to rebuild after catastrophic events.
Innovation, it said, is critical in helping insurers to operate more transparently, which will make it easier to manage the business and win customer confidence.
“Better technology and richer data sets will enable underwriters to identify profitable risks more quickly and assess market demand for new products more accurately. Insights that take hours or minutes to generate today will be available in seconds tomorrow,” said EY in a report issued February this year.
“Companies with innovative underwriting and claims platforms show greater market share and stronger year-over-year results.”
According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), Zimbabwe’s internet penetration had clocked 60 percent and by March 2021, mobile internet and data traffic had risen by 30 percent spurred by the increased adoption of digital platforms under the Covid-19 lockdown environment.
Insurance and pension service providers should ride on these digital capabilities and fully adopt them to influence product development, smart marketing that strengthens customer trust as well as enhance distribution of services through enhanced interaction and knowledge sharing.
Credit Insurance Zimbabwe Limited (Credsure) business development analyst, Patrice Chiremba, says their organisation is gravitating towards this new reality in order to keep afloat.
“Year 2020 has been tough because Covid-19 is not something we had prepared for. Fortunately, we are an innovative company, so we improvised by developing a digital platform called ‘auto-fill’, which is mainly for motor insurance where clients can easily access insurance from the comfort of their homes.”
Using this plaform, Chiremba said customers were able to check quotations, make payments online, and do enquiries in a more interactive manner.
Similarly, Bulawayo-based youth entrepreneur, Leeroy Fredericks (34) has developed a digital shopping platform, called ‘eGrossa Online’, which now offers WhatsApp-based insurance payment service.
“The new online service allows users to buy their motor insurance and vehicle licensing via WhatsApp and have their licensing disks delivered to their doorsteps in selected cities,” he told Business Chronicle.
The Minister of ICT, Postal and Courier Services, Dr Jenfan Muswere, has said that digital solutions across the spectrum, hold the key to sustainable economic transformation and recovery from the adverse impact of the Covid-19 pandemic.
Commenting, ICT consultant Engineer Jacob Mutisi said: “The pension and insurance sector should have more payments done through mobile platforms, have swipe and online payments so that they can take advantage of those who are home because of Covid-19.
“Zimbabwe should have more platforms creating competition to reduce the cost of transacting.
“Imagine nine million people paying a $1 a month and the country’s insurance is covered.”
Research insight from Standard Chartered Bank’s ‘Opportunity2030’ study conducted early 2020 also reinforces the innovation imperative by stating that providing universal digital access represents the greatest investment opportunity for the private sector, including the insurance businesses.
“The biggest single opportunity across the African markets in the study is in increasing digital access — a combination of mobile phone subscriptions rates and internet connectivity,” it noted.
Bongani Ndlovu
Online Reporter