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Nelson Gahadza
Business Reporter
Uptake of micro-insurance products in Zimbabwe is growing, as business written by micro-insurers increased 365 percent to $2,78 billion in 2022 from $0,60 billion in 2021, the Insurance and Pensions Commission (Ipec) said in its fourth quarter 2022 short-term insurance report.
Microinsurance is a mechanism to protect low-income people against risks, such as accidents, illness, and natural disasters, in exchange for insurance premium payments tailored to their needs, income, and level of risk. Globally, the microinsurance sector has become a fast-growing industry with a potentially untapped market of over 2 billion people worldwide.
However, in Zimbabwe, out of 10 registered micro-insurance companies, only two were operational in 2022.
According to the Ipec report, in terms of foreign currency-denominated business, the total gross premium written amounted to US$247 429,84 for the year under review, a significant increase from US$735,01 reported for the same period in 2021.
“The significant increase shows improved uptake of micro-insurance,” Ipec said.
The insurance and pensions regulator in June 2017 introduced a micro-insurance framework whose primary objective was to promote the development of micro-insurance in Zimbabwe by establishing a basis for the regulation and supervision of micro-insurance activities and protection.
IPEC Commissioner Dr Grace Muradzikwa recently said the insurance regulator had developed a micro-pensions guideline as part of strategies to promote financial inclusion through development of insurance products for non-standard workers and those working in the informal sector.
In an effort to foster financial inclusion and improve livelihoods at old age, Ipec is also developing a micro-pensions framework that will compel pensions industry players to develop products that are accessible by low non-standard workers or the informally employed.
However, a micro-pension/provident fund is a voluntary fund with both savings and retirement benefit entitlements that support small, irregular and sustainable savings by individuals to provide them with a regular stream of pension annuities or lump sum in old age.
The member contributes personally to obtain benefits based on a defined contribution in the form of pensions or otherwise, payable on death, retirement or any other occurrence, which entitles a member to start receiving benefits under the rules of the particular fund.
According to the short-term insurance report, the two micro-insurers were compliant with the minimum capital requirement of $4,5 million as at December 31, 2022.
Ipec said all companies must prepare for the implementation of the new US dollar indexed minimum capital requirements. The micro-insurers reported a total asset base of $4,94 billion, as at December 31, 2022, which is a nominal increase of 855 percent from $0,52 billion reported as at December 31, 2021.
Investment property and investments in properties and equipment were the major assets class, constituting 75 percent, and 15 percent respectively, while cash and cash equivalents constituted 7 percent of the total assets.
The two micro-insurers recorded a total profit after tax of $0,76 billion for the year ended 31 December 2022 compared to $0,12 billion reported the same period in 2021, reflecting a 556 percent increase in profit after tax.
Online Reporter