Online Reporter
Gibson Mhaka [email protected]
ZIMBABWE’S funeral assurance sector staged a strong recovery in the first quarter of the year, recording a 359 percent surge in underwriting profitability despite declining insurance revenue, as improved cost management and stronger underwriting offset weakening business volumes.
However, the Insurance and Pensions Commission (Ipec) has warned that the sector remains weighed down by structural weaknesses, including liquidity constraints, inadequate capital buffers among some players, poor diversification of investments and widespread non-compliance with prescribed asset requirements.
According to Ipec’s Funeral Assurance Sector Report for the quarter ended March 31, 2026, the industry generated a combined insurance service result of ZWG48,7 million (US$1,9 million), up from ZWG10,6 million (US$398 000) recorded during the corresponding period last year, representing a 359 percent improvement in underwriting profitability.
Profit after tax also more than doubled to ZWG8,5 million (US$336 000) from ZWG4,16 million (US$154 000) recorded in the first quarter of 2025, while returns on equity and assets improved from negative four percent to positive one percent, signalling a return to profitability.
The improved financial performance came despite the sector recording a five percent decline in nominal insurance revenue to ZWG69,8 million during the review period, while inflation-adjusted insurance revenue fell by nine percent.
Foreign currency-denominated business also contracted by 36 percent compared to the same period last year, reflecting continued pressure on funeral assurance business.
Ipec attributed the improved performance largely to stronger underwriting efficiency, with the industry’s combined ratio improving significantly to 92 percent from 143 percent recorded during the comparable period last year.
“The industry combined ratio below 100 percent indicates that, on average, funeral assurers generated sufficient revenue to cover claims and operating expenses from their core underwriting activities,” the Commission said.
The report noted that performance across companies remained uneven, with Moonlight Funeral Assurance recording the strongest underwriting performance after achieving a combined ratio of 51 percent, while Foundation Mutual, Sunset Funeral Assurance and Vineyard Funeral Assurance all posted underwriting losses due mainly to elevated operating expenses. Vineyard recorded an exceptionally high combined ratio of 1 209 percent.
Despite the turnaround in profitability, Ipec cautioned that liquidity conditions across the industry remained fragile.
Four of the six operational funeral assurers reported current ratios below the minimum benchmark of one, while the sector’s weighted average current ratio declined from 1,1 to 0,9 during the quarter. Aggregate working capital remained negative at ZWG17 million, highlighting persistent short-term funding gaps.
“The Commission will continue to closely monitor liquidity positions across the industry to safeguard policyholder interests and financial stability,” the regulator said.
Capitalisation levels improved during the period, with five of the six operational funeral assurers meeting the minimum regulatory capital requirement of US$500 000 prescribed under Statutory Instrument 67 of 2025.
However, Sunset Funeral Assurance remained below the minimum threshold with capital of US$315 000.
“The Commission is closely monitoring this position to ensure the protection of policyholder interests and the stability of the sector,” Ipec said.
The regulator also expressed concern over the industry’s investment profile, noting that funeral assurers continued to maintain an undiversified asset base.
Property, plant and equipment accounted for 67 percent of total assets, while investments in equities and bonds represented just 0,2 percent against the prescribed minimum allocation of 10 percent. Cash and bank balances constituted only 0,5 percent of total assets, further highlighting liquidity challenges.
Another area of concern was compliance with prescribed asset regulations.
The sector’s aggregate prescribed asset ratio stood at only 0,01 percent as at March 31, far below the statutory minimum requirement of 10 percent.
Only Foundation Mutual maintained any investment in prescribed assets, although its ratio of 0,15 percent also remained significantly below regulatory requirements, leaving all six operational funeral assurers technically non-compliant.
The report further revealed that none of the six operational funeral assurers maintained formal reinsurance arrangements during the review period.
While acknowledging that funeral assurers traditionally self-insure through ownership of funeral service infrastructure, Ipec urged companies to embrace reinsurance as an additional risk management tool capable of strengthening their balance sheets and enhancing industry resilience.
On the consumer front, active funeral assurance policies declined by 20 percent from 102 337 at the beginning of the year to 81 528 by the end of March, largely due to policy lapses and policies that were not taken up.
The Commission also handled 13 complaints against funeral assurers during the quarter, with 12 involving First Funeral Assurance. Nine complaints related to delayed settlement of claims, while four concerned claim repudiations.
“Sector players are hereby reminded to strictly adhere to the provisions of Circular 3 of 2024 on the timely processing and payment of claims. Failure to comply with the prescribed requirements may result in regulatory action and the imposition of appropriate sanctions,” Ipec said.
Looking ahead, the regulator said although the sector had recorded a marked improvement in financial performance, significant structural vulnerabilities remained.
“The Commission urges all funeral assurers to strengthen governance frameworks, improve liquidity and capital management, invest in prescribed assets as required by law, and adopt prudent risk-based business models.
“These measures are essential for the long-term protection of policyholders and the sustainable growth of the sector,” the report said.
