Hyperinflation has played havoc with Zimbabwe’s Insurance sector; however, sustained policy consistency could allow for gradual recovery
- Zimbabwe Industry Research: Insurance
- Year : May 2021
Summary
Protracted economic challenges, which culminated in the change of Zimbabwe’s functional currency (from USD to ZWL) and the subsequent onset of hyperinflation resulted in significantly lower insurance sector gross premiums in 2020 and 2019 (2020: USD156m, 2019: USD138m) relative to the prior period (2018: USD703m) and a corresponding decrease in insurance penetration to 0.6% in 2020 (2019: 0.6%; 2018: 2.3%). GCR views these declines to be credit negative.
Additional Information
The long-term industry relies heavily on recurring business which accounts for 95% of total premiums. Positively, lapse rates were lower than expected (FY20: 8.5%; FY19: 7.7%) thus displaying some resilience to the impact of COVID-19 despite already suppressed disposable incomes. However, new business uptake was restrained by low confidence in life assurance by policyholders due to currency changes and high inflation experienced in 2020.
