IN the insurance industry, credibility has traditionally been measured through one lens of creditworthiness. Can the insurer pay claims?
While this question remains fundamental, it is no longer sufficient. Today, credibility is being redefined. Policyholders, regulators, and partners are no longer just asking whether an insurer can survive the present. They are asking whether it can sustain trust over decades. This shift shows a transition from solvency to sustainability.
Traditional anchor: Solvency
Solvency has served as the backbone of insurance confidence. It reflects an insurer’s financial strength and its ability to meet obligations as they grow over time.
It is measured through:
l Capital adequacy;
l Liquidity levels;
l Claims-paying ability; and
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l Regulatory compliance.
For decades, strong solvency ratios were enough to show the stability. But solvency is, by nature, a point-in-time measure. It tells us where an insurer stands today and it is not about where it will stand tomorrow.
Creditworthiness alone inadequate
The insurance landscape has evolved significantly:
l Climate risks are unpredictable;
l Economic cycles are unstable;
l Expectations of policyholders are now higher; and
l The regulatory survey is deeper
In such an environment, an insurer may appear creditworthy today still it remains exposed to structural risks over time. This is where sustainability enters the conversation.
Role of credit rating in this transition
This shift from solvency to sustainability is not always visible through internal metrics alone. It requires independent, structured evaluation. This is where institutions such as ICRA Zimbabwe play an important role. Instead of focusing only on financial graphs, credit rating frameworks assess:
l Capital strength and its durability;
l Earning quality over time;
l Exposure of risk in different types of scenarios;
l Governance and management effectiveness; and
l Industry positioning and competitive strength.
By doing so, they provide a forward-looking perspective, one that aligns closely with the idea of sustainability.
What insurers must focus on
To move forward from solvency toward sustainability, insurers need to rethink how they build trust:
l Strengthening risk culture: Risk management must transform from compliance-based to strategy-oriented process;
l Investing in data and analytics: Better data of leads for better forecasting, pricing, and claims management;
l Improving governance standards: Transparent and responsible leadership builds long-term confidence;
l Aligning products with real needs: Sustainable insurers design products that remain relevant across economic cycles; and
l Maintaining consistent communication: Credibility grows when stakeholders are informed and not surprised.
Changing reality
In today’s insurance market, credibility is no longer earned once it is continuously demonstrated.
An insurer that is:
l Solvent with inconsistency;
l Capitalised but with poor governance; and
l Profitable but short-ranged due to which they will struggle to maintain long-term trust.
On the other hand, insurers that embed sustainability into their operations are better positioned to:
l Withstand shocks;
l Retain policyholder confidence; and
l Attract long-term partnerships.
Final thought
Solvency answers a critical question: “Can this insurer meet its obligations today?”
Sustainability answers a more important one: “Will this insurer remain dependable in the years to come?”
The future of insurance credibility lies at the intersection of both. And with analytical frameworks supported by organisations such as ICRA Zimbabwe, the industry is steadily moving toward a more holistic, forward-looking definition of trust, one that values not just financial strength, but enduring reliability.
Chawoneka is chief executive officer of International Credit Rating Agency (Private) Limited. — [email protected]
