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State of the insurance industry

By Grace Muradzikwa (ipec commissioner)

I AM  honoured to be invited as guest speaker at these Zimbabwe Independent Insurance Survey 2021 Awards. It is gratifying to note that this event seeks to recognise the excellent performance by some of our regulated entities who have gone beyond the call of duty by excelling in various categories notwithstanding the challenging operational environment brought about by the Covid-19 pandemic.

We are over a year into the pandemic, and clearly with the many variants we have witnessed, the future remains uncertain as the virus continues to mutate leaving countries battling wave after wave of the pandemic.  The level of vaccinations on the other hand remains low and this means we are still away from returning to normal.

I therefore, find the theme for this event: “Thriving in a new business environment” appropriate in that corporates have had to adapt to remain relevant. As you may all be aware, insurance business, particularly here in Zimbabwe relied heavily on relationships and traditional distribution channels such as walk-in  clients and agents visiting clients to sell insurance policies. With the Covid-19 induced restrictions, insurers have had to innovate in terms of products and distribution channels for survival. I believe at this event we are about to witness the recognition of insurance companies that were able to pivot their institutions.

A key lesson from the past year is that traditional Enterprise Risk Managementprocesses ( ERM) were unsuccessful in identifying the full scale of the pandemic as its impacts materialised into multiple key risks to organisations, such as infection risk,(companies had to incur unplanned expenditure to protect their staff and stakeholders), business interruption risk (again companies had to strengthen their business continuity plans by heightening digitalisation and capacitating staff to work remotely), consequently cyber security risk and fraud risk also increased.

These also included third party risk (as the industry had to and still relies on a lot of third parties to deliver service),liquidity risk due to the slowdown in economic activity with rental voids and calls for pension holidays, credit risk due to contribution arrears, premium debtors and supply chain disruptions. The pandemic was also very demanding on human capital as lives and livelihoods have been changed forever.

As they say, every dark cloud has a silver lining, the pandemic resulted in the industry leapfrogging digitalisation of both supervisory processes and the insurance business value chain resulting inimproved operational efficiencies.

Thus, the full impact of the pandemic on the insurance industry is still unfolding, but as a Commission we are happy that to the best of our knowledge, legitimate claims were settled.

The potential impact of crises such as the Covid-19 pandemic on financial stability has highlighted the interconnectedness of markets and reinforced the need for relevant authorities to incorporate a wider array of risks in risk management to enhance financial stability.

Thus, as the Commission, we are enhancing our macro-prudential supervision as well as strengthening cooperation with other financial sector regulators to manage systemic risks that can threaten financial stability. Well managed and regulated entities can failif we donot pay attention to systemic risk.


As you may be aware, capitalisation is a key factor in insurance for the protection of both the insurer and the policyholder. In our case, compliance with Minimum Capital Requirements stood at (92%) in March 2021 from 87% in December 2020. However, let me hasten to say the increase in compliance with MCR is attributable to asset revaluations, most of which are unrealised.

Generally, the insurance industry is adequately capitalised except for the funeral assurers and life assurers whose capitalisation as at June 30, 2021 stood at 63% and 67%, respectively. Funeral assurers have remained undercapitalised with compliance level slightly improving from 38% and 50% to 63% between December 2020, March 2021 and June 2021 respectively.

The sector is relatively young compared to the other industry players and has played a critical role in the wake of the Covid-19 pandemic.

Having said this, the commission is transitioning to a risk-based capital framework. It is in this respect that in June this year, the Commission launched the Zimbabwe Integrated Capital and Risk Programme (ZICARP)Framework aligning the industry’s capitalisation with the risk profile of entities, which is an international best practice.

It is the Commission`s expectation that the ZICARP Project will address the issue of capitalisation of the sector.

GPW and assets

The Combined Gross Premium Written increased by 435% from ZW$1,42 billion (US$16,5 million) in March 2020 to ZW$7,61 billion (US$88,7 million) in March 2021. This represents a real growth of 96%.

On total industry assets, there was a nominal increase of 41% from ZW$50,4 billion (US$587,4 million) reported as at  December 31, 2020 to ZW$70,8 billion (US$825,1 million) reported as at March 31, 2021.

Combined ratios

Combined ratios, which is the profitability index, for the insurance sub-sectors during the first quarter ending March 31, 2021 were, 77,8%,(life assurers) 131%,(life reassurers),84%, (short term insurers), 100,76%(short term reassurers) and 87% for (funeral assurers). From these combined ratios for short-term and life companies which account for the lion’s share of the industry, we can conclude that the industry is stable and resilient.

Claims paid

Notwithstanding the Covid-19 pandemic the industry continued to operate seamlessly and paid claims worth ZW$827million (US$9,6 million) from January to March 2021.


Some of the challenges facing the insurance sector include:

  • Image of the industry emanating from legacy issues. There is need for greater focus on product relevance and improve the insurance penetration ratio which is at a low of 3%.
  • Reductions in cover, for instance many individuals do not take comprehensive cover any more:
  • However, this also points to an opportunity for the industry to design and offer relevant products that speak to the needs of the market.
  •  Premium debtors —  there is cutthroat competition as entities are competing for a small cake and some are offering insurance on credit. Thus, the sector has a growing book of premium debtors.
  • Compliance costs —  Due to the turbulent environment, the commission is enforcing compliance and compliance comes at a cost.
  •  Limited foreign currency-denominated investment instruments in the domestic market.


The pandemic has exposed protection gaps especially around business interruption, hence creating opportunities for the industry to develop covers that plug this gap for the future. As I highlighted earlier, whilst navigating the digital revolution, the challenges of cyber risk have been heightened and the need for cyber insurance.

As regulators, we are alive to the changing environment and have also redefined the new normal with off-site inspections and surveillance becoming the new norm.

In addition, we are warm to and will support new innovations as the global insurance industry moves towards smart digitalisation provided the interests of   policyholders are protected. It is our expectation that the industry will continue to embrace digitalisation to not only improve service delivery but come up with customer centric products which will improve the resilience of the industry to future shocks.


Allow me now to bethe first one to extend heartfelt congratulations to the winners on your well-deserved awards.

  • Muradzikwa was the guest of honour last night at the Zimbabwe Independent 2021 Insurance Survey Award ceremony. She is the current commissioner of the Insurance and Pensions Commission (Ipec). She is a decorated insurance executive, who was once with NicozDiamond where she was the managing director following the acquisition of the short term insurer by First Mutual Holdings. Muradzikwa became the first black female executive to list and head a publicly traded company in the country following the listing of NicozDiamond on the local bourse in 2002.

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