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UK-based research firm-BMI Research, which is part of the Fitch Group, has forecast the Zimbabwe life insurance business to grow by 3,6 percent in 2018 after growing by an estimated 4 percent in 2017. In a report titled “Zimbabwe Insurance Report,” the research company said the growth in life premiums will accelerate and move onto a higher growth path in 2019 to 6,1 percent.
“While acknowledging significant potential for reform and growth from a depressed base, we predict that premium growth will average 4,8 percent per annum in US dollar terms over the next five years in the life sector, and 5,9 percent per year in the non-life sector, with the pace picking up beyond 2018,” said the report. Gross premium written is expected to grow to $373,5 million in 2018 and $396,3 million in 2019. The estimated level of gross premium written for 2017 is $360,3 million.
BMI anticipate that the dollar value of premiums in the non-life sector will rise by 3,9 percent in both 2017 and 2018, before moving onto a higher growth path of 5,9 percent in 2019.
“We predict average growth in non-life premiums written of 5,1 percent per annum, taking the total value of premiums to $277 million in 2021, up from $224 million in 2017. The key downside risk to our current forecasts is that Zimbabwe fails to recover from recession, or enters a fresh downturn within the next two years due to a disappointment of newly raised expectations of a sustainable recovery. BMI however said, risks are now tilted increasingly to the upside.
“On balance, risks to our insurance forecasts are moderately tilted to the upside. In the event that reform momentum is strong in Zimbabwe and the economy develops more rapidly than currently envisaged, the non-life sector is likely to benefit a little more strongly than the life sector, given the positive impact of higher economic growth on demand for big ticket consumer items, including motor vehicles.
“Zimbabwe has a highly educated population, parts of the country’s physical infrastructure remain in good shape and significant potential could be unleashed in the event that the new regime does re-engage with creditors and the wider international community in reasonably good faith, especially given that economic activity is at a low base, relative to the mid to late 1990s.
“Under even a moderately reformist direction, a reversal of the long-running brain drain would also add to the country’s prospects,” said the report. BMI also made reference to the country’s monetary sector saying the Government may well de-dollarise the economy, especially in the event that it is able to support the process by securing a credit line from the IMF, which would bolster foreign exchange reserves and allow the central bank scope to defend a new local currency.
“However, in the absence of clarity, we will avoid making local currency denominated forecasts for the trajectory of insurance premiums until or unless such a policy is not only announced, but formally introduced,” it said.
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