ZIMBABWE’S insurance industry is contributing a mere 0,4% to the country’s gross domestic product (GDP), despite the nation being among the fastest-growing economies in Southern Africa.
This revelation was made by Insurance and Pensions Commission (Ipec) commissioner Grace Muradzikwa during the inaugural Insurance Strategic Leadership Summit held in South Africa this week.
Muradzikwa urged industry players to rethink their business models and embrace digital transformation to remain relevant in an evolving economic landscape.
“The insurance sector’s contribution to GDP is just 0,4%, which is far too low. We are not seeing the growth in our industry that matches Zimbabwe’s overall economic growth,” Muradzikwa said.
She emphasised the need for the sector to align itself with key growth areas such as agriculture and mining.
“While there is a lot of focus on agriculture, we have not developed sufficient products for the mining sector or smallholder farmers, which are key areas of opportunity.”
Muradzikwa also highlighted the untapped potential of Zimbabwe’s informal sector, which accounts for 70% of the economy.
“Economic volatility, fluctuating exchange rates, and inflation are significant challenges, particularly for pricing products accurately and maintaining profitability,” she said.
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“The growing informal sector holds substantial potential, but we have not developed products tailored to its needs.”
Muradzikwa stressed the importance of leveraging technology to address these gaps.
“We must focus on technological disruption, customer behaviour insights, and data analytics. Our industry lacks the necessary skills in these areas, which are critical for innovation and compliance,” she said.
“We need to rethink our value chain, foster collaboration, and embrace digital transformation to remain relevant in a rapidly changing world.”
Muradzikwa raised concerns about the industry’s high expense ratios, which range from 56% to 60%.
“Our expense ratios are concerning, particularly when you examine the 2023 figures. It is unsustainable for business expenses to nearly equal claims pay outs,” she said.
“If we can improve our business process efficiencies, our combined ratios will become more manageable. We have got to do business in a way that we have never done before.”
Insurance Institute of Zimbabwe (IIZ) president Clementine Chinyuku echoed Muradzikwa’s sentiments, calling on industry leaders to prioritise innovation and collaboration.
“Collectively, we have the capacity to build a resilient insurance sector that promotes economic growth and meaningfully supports the development of the country,” Chinyuku said.
“It is very crucial that we commit to a thorough re-evaluation of our strategies, embrace innovation, and promote a culture of collaboration.
“United in our efforts, we can thrive in this promising era of the insurance industry.”
Insurance Institute of South Africa chief executive officer Thokozile Mahlangu stressed the importance of cross-border collaboration and the adoption of artificial intelligence (AI).
“There are many other areas where there can be collaboration. One of those would be public-private partnerships, and driving infrastructure and insurance solutions,” Mahlangu said.
“There is a need for cross-border collaboration and expansion into the African emerging market, ensuring that we align with international strategies and enable the African insurance industry to become a relevant industry.”
Mahlangu also highlighted the role of AI in transforming the sector.
“Of course, there will always be the touch of a human being in analysing what AI has done, and comparing the cover that you provide against what the loss is, and how you then need to respond to that,” she said.
Robotics expert Arthur Mutambara urged African countries to take a proactive role in AI development rather than merely consuming foreign technology.
“If we are to maximally benefit from AI, we can’t just be using AI. We must be developing and building our own systems,” Mutambara said.
“There is also an element of hardware that drives AI, the semiconductor industry. We need to play in that space as Africans.
“It might not be viable for Zimbabwe to do as a country, but as a continent, it is. I know AI is exciting, but we need to make some serious adjustments. We have to work. It cannot be business as usual.”
The summit, which concluded today, was held under the theme “Rethinking Insurance for a New Era: Strategies for Zimbabwean Companies to Thrive in a Changing Industry”.
The discussions underscored the urgent need for the insurance sector to adapt to economic challenges, embrace technological advancements, and foster collaboration both locally and across borders.
