THE insurance sector is set to have more players following the introduction of the Micro Insurance Bill which will allow new and small-to-medium players who cannot meet high capitalisation requirements to participate in the sector, a senior industry official said.
The introduction of the bill will complement the amendment of the Insurance Act which is expected to be finalised soon.
In an interview with businessdigest this week, the Insurance Institute of Zimbabwe (IIZ) president and Moonlight Funeral Assurance group CEO Chomi Makina said the Bill would encourage smaller operators to enter the market as the capitalisation requirements would be significantly lowered.
Capitalisation requirements for insurers range between US$1,5 million and US$3 million.
“Right now we are looking at the Micro Insurance Bill,” Makina said.
“Those people who cannot afford to raise the capitalisation levels to be insurers can become micro insurers. The capitalisation levels are different, so we are allowing the small players to come into the mainstream.”
He added the amendment of the Insurance Act would ensure that previously marginalised insurers could be accommodated in the sector.
Makina said the Commissioner of Insurance had been consulting on the amendments across the spectrum, including life assurers and short-term insurers as well as funeral assurers and brokers.
Makina said the liquidity crunch in the market had slowed down business in the sector save for vehicle insurance and funeral assurance. He said the life assurance sector has been one of the hardest hit owing to low confidence in the market after life assurance policies were made redundant during the hyper-inflation era.
The insurance penetration rate in Zimbabwe was between one and 2%. This, Makina said, showed there was a huge market for insurers to tap in. He said insurers had to find ways to penetrate the market, especially those in the informal sector.
The IIZ president said given that most people in the informal sector did not bank their money because of lack of confidence in the banking sector, they were using various methods to pay their premiums, including using mobile money products such as EcoCash and Flexipay.
He said the insurance sector had not been spared from job losses that have cut across all sectors of the economy, which is still to recover from the brain drain the country suffered at the height of the economic crisis.
Makina said the insurance business would remain depressed as long as the manufacturing sector’s capacity utilisation remained around the current 39,6%.
He said the industry expected Finance minister Patrick Chinamasa to come up with measures to stimulate growth, particularly in the agriculture and manufacturing sectors when he presents the national budget next month. Revival in those sectors meant more insurance policies, thus increasing the country’s insurance penetration ratio.
Makina said the sector, in conjunction with the Insurance and Pensions Commission (Ipec), was working on weeding out bogus insurance agents, adding that the funeral assurance sector had intensified efforts to identify bogus agents. This had resulted in the arrest of several culprits by the Zimbabwe Republic Police fraud squad.