Short-term insurers post stronger underwriting performance despite liquidity concerns

ZIMBABWE’S short-term insurance sector recorded a marked improvement in underwriting performance during the first quarter of 2026, underpinned by stronger claims management and improved operational efficiency, although the industry continues to grapple with liquidity constraints that have delayed the settlement of claims.

According to the Insurance and Pensions Commission (ipec) First Quarter 2026 Short-Term Insurance Sector Report, the industry’s insurance liabilities declined while underwriting performance strengthened, signalling improving operational fundamentals despite persistent financial pressures.

The regulator, however, warned that liquidity remains one of the biggest risks facing the industry, with nearly half of licensed insurers reporting negative working capital.

Nine of the country’s 20 short-term insurers ended the quarter with current ratios below the minimum benchmark of one, exposing them to potential short-term solvency challenges.
Ipec said the liquidity challenges were already affecting service delivery.

“Delayed claims account for 81 percent of all complaints received from direct insurers, totalling 57 out of 70 complaints,” the Commission said.

The report attributed the liquidity pressures to excessive reliance on slow-moving assets such as outstanding receivables from brokers and agents, as well as delayed recoveries from reinsurers.

“These factors indicate underlying liquidity and operational pressures within the insurance sector, which could impact the entities’ ability to meet short-term obligations and maintain financial stability,” Ipec said.

To strengthen the industry’s resilience, the Commission said insurers should tighten liquidity management systems, improve premium collection, maintain stronger United States dollar liquidity buffers and review reinsurance structures.

“The industry must continue to strengthen liquidity management frameworks, including weekly cash-flow forecasting and stress testing, while improving premium collection processes, particularly for brokers and agents, to reduce receivables-driven liquidity pressure,” the report said.

The Commission said it would intensify supervision of insurers with persistently weak liquidity positions and repeated delays in settling claims.

“Regulatory focus will be on intensifying supervision of insurers with persistently negative working capital and repeated delays in claims settlement,” it said.

Despite the liquidity concerns, the industry’s financial performance remained resilient.
Insurance liabilities declined by eight percent to approximately US$120,83 million as at March 31, 2026, while reinsurance liabilities increased by 25 percent to about US$45,6 million, reflecting growing obligations arising from reinsurance contracts.

The report also showed that liquid assets declined by six percent to approximately US$177,86 million, largely due to a sharp 97 percent fall in short-term investments.

Meanwhile, the market remained highly concentrated, with Old Mutual, NicozDiamond, Cell Insurance, Zimnat and Alliance collectively accounting for 66 percent of consolidated insurance revenue during the quarter.

In the foreign currency business segment, Old Mutual, Cell Insurance, Alliance, NicozDiamond and Zimnat commanded a combined market share of 75 percent, underlining their dominance in the sector.

In terms of total assets, Alliance, AFC, NicozDiamond, Cell Insurance, Old Mutual and Zimnat controlled 59 percent of the industry’s asset base.

“The market landscape reveals a high degree of concentration among leading insurers in terms of consolidated insurance revenue, foreign currency-denominated business and assets.

“The dominant players’ extensive market share underscores their critical role in sector stability, while the presence of smaller insurers highlights opportunities for diversification and growth,” Ipec said.

The Commission also underscored the need for insurers to strengthen compliance with prescribed asset regulations by adopting forward-looking compliance plans linked to business growth and currency composition.

It said it would continue conducting periodic valuation and liquidity reviews while closely monitoring insurers that remain persistently below the prescribed asset requirements.