EVENTS of the past 16 years have reaffirmed what Zimbabweans have long suspected about the insurance industry.
The mistrust is not imagined. It is rooted in lived experience, in how business has been conducted, how promises have been broken and how those entrusted with people’s lifetime savings responded when crisis struck.
This is why the retail side of insurance has remained comatose, why uptake continues to wilt and why faith in the sector is so brittle. Insurance is a business built on trust. In Zimbabwe, that trust was squandered!
The catastrophe of 2008 remains an unhealed wound. Up to US$5 billion in pensions and long-term savings evaporated, taking with it the futures of thousands of ordinary workers.
Sixteen years after restitution efforts began; pensioners remain empty-handed, carrying questions that have never been answered.
Where did their money go? Why have those responsible not been held to account? Today, in their old age, they seek clarity and justice but are offered actuarial gymnastics — complex assessments that justify nothing, compensate nothing and restore nothing.
These technical constructs do not buy food, medicine or dignity. They merely deepen resentment and reinforce the perception of an industry that refuses to confront its own failures.
The cost of this legacy has been severe. Markets have voted with their feet. Confidence has collapsed. And as a joint regulatory report released last week confirmed, many insurers are now financially paralysed.
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They cannot pay claims in full. Policyholders are forced to negotiate, to accept instalments where punctual settlement should be guaranteed. This is not innovation; it is distress.
It is the culmination of years of mismanagement, greed and strategic drift. Yet, in a twist dripping with irony, insurers are now lobbying for a lifeline from the state.
As The Standard revealed this week, local insurers want the Zimbabwe Investment Development Agency (Zida) to compel foreign investors to channel their insurance contracts through domestic companies.
Instead of repairing balance sheets, strengthening governance or rebuilding trust, the industry wants regulatory force to guarantee business it has not earned.
This desperation comes at a time when the sector is battling its fiercest liquidity squeeze in decades. Company closures have gutted premium inflows. Investment returns are depressed.
Balance sheets are buckling. Instalment-based claim payments, the clearest indicator of insolvency pressures, would prompt immediate intervention in any mature market.
Yet local insurers want foreign investors, bringing in millions in capital, to ignore these red flags simply because Zida says so. It is a bold proposal, but one wildly detached from reality.
According to the 2024 Annual Financial Stability Report, 10 out of 19 short-term insurers and two reinsurers reported negative working capital.
A dozen insurers and pension funds failed to meet minimum capital thresholds. Long-term savings products have collapsed, leaving funeral policies — the cheapest, least developmental products - to dominate the market.
Capital erosion has become structural. No serious investor would look at this landscape and voluntarily place coverage for strategic assets in such fragile hands.
This is why the debate at the Southern Africa Insurance Indaba in Victoria Falls was so instructive. Executives complained that foreign investors were entering Zimbabwe with insurance already arranged abroad and argued that Zida should impose compulsory quotas for local firms.
Their frustration is understandable. Their remedy is not. Investors are not bypassing local insurers out of malice or ignorance. They are safeguarding their capital by choosing insurers with the capacity, stability and consistency Zimbabwe’s industry has struggled to demonstrate.
For a sector still burdened by unresolved pension losses, governance failures and weak capitalisation to demand guaranteed business through regulatory compulsion is to misread the moment entirely.
Trust is earned, not legislated. Overseas insurers enjoy decades of credibility because they have honoured obligations consistently. Local insurers cannot demand confidence through policy instruments when they have not rebuilt it through performance.
Forcing foreign investors into local insurance arrangements would mark a troubling regression towards command economics. It undermines the free-market principles Zimbabwe professes and risks deterring the very investment the country desperately needs.
The truth is uncomfortable but unavoidable: investors will not insure multimillion-dollar assets with firms whose own regulators warn of capital inadequacy. They will not reward a sector that still has not resolved the US$5 billion it lost.
The way forward is not to weaponise Zida. It is to restore credibility, by honouring claims, rebuilding capital, completing pension restitution and demonstrating that the mistakes of 2008 will never be repeated.
