Zim insurance sector set for rebound

Source: Zim insurance sector set for rebound | Daily News

HARARE – Zimbabwe’s insurance sector is set for a rebound following rising investor confidence in the country after the inauguration of a new government late last year, market experts have said.

The southern African country is currently enjoying a breath of fresh air following the ascendency of President Emmerson Mnangagwa — who is generally viewed as pro-business — resulting in international investors making a beeline to Zimbabwe.
Mnangagwa replaced former president Robert Mugabe who succumbed to both military and people pressure and resigned in November last year.

ZimSelector managing director Luke Ngwerume said the country should take advantage of the new economic dispensation to increase its insurance penetration rate, which is currently averaging 1,5 percent, to develop the economy.
“We believe that an increase in insurance penetration rate will have a direct and positive impact on the economy,” he told journalists attending an insurance mentorship programme in Harare on Friday.

Zimbabwe’s insurance penetration rate, which reached a high of 10 percent in the early 1990s, has been declining significantly over the last two decades with official figures showing that it dropped to a low of 1,5 percent in 2015.
Ngwerume, however, noted that the economic downturn of 2008 should not discourage people from getting insurance products.

“Many people’s insurance and pensions were eroded in the hyperinflationary period resulting in confidence erosion and a new generation of Zimbabweans at home and abroad that either don’t trust insurance or don’t know enough about it,” he said.
“The fact that we have assets means that the crazy period must not stop us from having savings and insurance,” he said.

The former Old Mutual Zimbabwe chief executive noted that insurance companies and pensions funds have funded many developments nationwide like; office buildings, shopping malls, housing developments, roads, dams, power stations, transmission lines, agricultural and mining activities.
“Any country that is developed will always find a correlation between the level of development and the level of savings and most savings come from insurance and pensions,” Ngwerume said.

Tendai Karonga, commissioner of Insurance, Pension and Provident Funds said his organisation found it prudent to support journalists’ capacity building so that they can have the skills and expertise in insurance and pensions matters.
“This will enable them to raise awareness for corporates and individuals to manage risk and safeguard their rights with regard to insurance and pensions products,” he said.

“We are therefore hopeful that this mentorship programme will capacitate you to interrogate and demystify these perceptions or mysteries around insurance and pensions because this is an industry that is governed by established principles,” he added.
Karonga noted that when one buys an insurance policy, he or she will be transferring the risk of losing out on their asset in the event of an unfortunate incident happening.

On the other hand, saving for retirement through a pension scheme is a social security plan to ensure that one does not suffer from old age poverty when they would have retired from work and are no longer able to generate income.
“It is equally important for journalists to demystify the misconceptions that insurance and pensions are only for the rich. In fact, it is even more compelling for those who are not rich to buy insurance and secure their retirement through pension savings.

“This is so because normally they do not have the capacity to immediately replace an asset that would have been lost, neither do they have adequate investments to sustain them when they have retired from work respectively,” he said.
A FinScope Survey for 2014 on the insurance uptake in Zimbabwe revealed that only 30 percent of Zimbabweans had some form of insurance, 77 percent of them being in respect of funeral insurance while the remainder was for medical cover.

“That revelation is telling of how exposed the majority of Zimbabweans are in the event of them losing their assets either through accident, fire or any form of loss,” Karonga said. —The Financial Gazette