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A 400% growth has been recorded in Zimbabwe’s short-term insurance sector, registering a boost of capitalization and asset size, according to the 31 December 2022 industry report by the Insurance and Pensions Commission (IPEC).
The IPEC Q4 of 2022 industry report highlighted that the short-term insurance industry assets grew by a phenomenal 426% from ZWL20.0 billion recorded on 31 December 2021 to ZWL105.2 billion recorded on 31 December 2022 whilst capitalisation of the sector grew by 379% from ZWL11.3 billion at 31 December 2021 to ZWL54.1 billion recorded at 31 December 2022.
The industry growth marks the strengthening of its capacity to underwrite insurance and support economic growth. This is a positive development in that a strong insurance industry is quite key in supporting the financial inclusion agenda and economic growth. Whilst a part of the growth in the industry is naturally attributable to inflationary pressures, it also remains noteworthy that the industry actually recorded growth in real terms due to improved profitability and the introduction of new players into the sector. At the time of reporting, notably, there have been additional players in the insurance industry with the licensing of the AFC Insurance Company which was registered in August 2022 as well aS Empaya Insurance Company.
Interesting to note is the fact that one of the latest additions to the list of insurance companies, AFC Insurance, subsequently took the market by storm, gaining the pole position in terms of total assets and capitalisation as of 31 December 2022, contributing ZWL13.5 billion to the sector’s total capital of ZWL54.1 billion. This development makes AFC Insurance Company the largest short-term insurance company by capitalisation, followed by Old Mutual, Alliance, and Zimnat with capital positions of ZWL8.9 billion, ZWL4.7 billion, and ZWL4.4 billion respectively.
This comes as a major disruption to the long-standing traditional top insurers list which was previously dominated by the likes of Old Mutual, Alliance, Nicoz Diamond, and Zimnat. IPEC reported that in the comparative period ended 31 December 2021, the largest short-term insurers were Old Mutual, Alliance, and Nicoz Diamond whose capital positions stood at ZWL2.7 billion, ZWL1.6 billion, and ZWL1.3 billion respectively.
The table below shows the complete breakdown of the short-term insurance companies’ capital positions as reported by the regulator of insurance and pensions.
IPEC noted in its report that all of the short-term insurance companies were adequately capitalised at the reporting date and to further strengthen the capital positions of the industry, IPEC took a move to review the minimum capital requirements across the insurance industry.
Capitalisation is a critical metric for players in the insurance industry as it speaks to the industry’s capacity to withstand shocks and meet customer claims. More recently , the regulator of the industry has been aggressively pushing for the fair treatment of customers by insurance companies through its Treating Customers Fairly (TCF) framework which industry players are required to identify with and embrace in their operations.
The new entrant, which took the industry by storm, AFC Insurance Company is a local insurance outfit and a member of the AFC Holdings Group of companies which provides end-to-end financial services spanning banking, development financing, leasing, and insurance services. The AFC Group of companies is forwarding agricultural transformation through mechanisation and financial inclusion. The AFC Insurance company is a short-term insurer providing full-fledged short-term insurance solutions, with a bias towards agricultural insurance.
In an interview held on the sidelines of this year’s Zimbabwe International Trade Fair (ZITF), the General Manager of AFC Insurance, Mr. Cuthbert Masukume highlighted the fact that the new insurance company prides itself on a +45 strong branch network dotted across the length and breadth of the country through its sister company, AFC Commercial Bank, formerly Agribank. This places the insurance company in a very strong position to deliver wide-reaching services to the previously marginalised sections across the socio-economic divide, thereby forwarding the financial inclusion agenda.
The short-term insurance sector is a key enabler of economic growth as it supports industry and commerce by providing insurance cover and essential financial support to the productive sector in the form of fire, motor, agricultural, and engineering insurance cover to mention just a few. Insurance is also key in providing bonds and guarantee cover to support infrastructural development and project financing.
