THE Insurance and Pensions Commission (Ipec) says the non-life sector is now writing more premiums than the life sector for the first time due to the ongoing reforms that are eroding the value of policies, businessdigest has learnt.
Policies that were denominated in the Zimbabwean dollar lost value when hyperinflation decimated the value of the local currency, forcing the authorities to adopt the United States dollar as legal tender in 2009.
A government decree that outlawed the use of the US dollar in local transactions and made the Zimbabwean dollar the sole legal tender eroded confidence in policies.
During Ipec’s first annual general meeting held on Wednesday this week, commissioner Grace Muradzikwa said the life sector needs to come up with innovative products in the current economic environment.
“The non-life sector is now writing more business than the life sector and that is really worrying, for the first time in the history of this industry. We are concerned about the life industry, obviously because of the current reforms the policyholders are asking themselves if the products that are on offer are relevant,” Muradzikwa said.
“From the figures that I shared, contrary to what has happened in the past, the life sector has always written more premium than the short-term and now the short-term are actually writing more premiums so I think that is speaking to that sector that they need to come up with relevant products that are speaking to consumers’ requirements.”
Muradzikwa said the life and pensions industry needs to self-introspect and interrogate what they needed to make sure they have a vibrant and sustainable industry.
She also said insurance companies need to challenge marketers, researchers and their product developers to be innovative and creative as they come up with new products that speak to consumer needs.
“Because of what they have gone through, you have policies losing value so you ask yourself if I’m going to take a life policy today and I still have 20 years to live, so we want a product which is relevant to the current realities,” she said.
Muradzikwa said the total asset value as at September 30 2019 was at ZW$22,3 billion, this translates to about US$1,4 billion compared to US$9,4 billion recorded the prior year.
“When you see us as a commission repeating ourselves like a broken record about the need for valuation guidelines, consistency, these are some of the numbers which are really worrying us. How can we move from US$9,4 billion to US$1,4 billion, particularly given the structure of our assert portfolios which are largely property and equities?” she asked.