THE Insurance sector in Zimbabwe is on the recovery path after having gone through difficult challenges in the last few years. The birth of the inclusive government and the introduction of the use of multiple currencies brought about some economic stability to the whole economy. Though confidence has returned to the market, there are still challenges to contend with. Just like all other industries, the insurance sector is bogged down by operational challenges resulting from political and business uncertainty.

Though dollarisation was a blessing, it brought some challenges which have affected not only the insurance industry but all sectors all sectors of the economy. It brought about a liquidity deficit in the market resulting in players experiencing recapiatlisation challenges, limited investment options,  inability to attract foreign investment to inject new capital and low disposable incomes resulting in shrinkage of the market.

The number of people who could afford to pay premiums was, as a result, reduced which has led to stiff competition as players compete for clients leading to low margins, low capacity utilisation, and worse still some companies are either retrenching or shutting shop altogether.

The banking and insurance sectors bore the brunt of the currency change. Up to now some clients still believe they were robbed of their hard earned money  as their savings were eroded after the country introduced the multicurrency system.  However, through the innovative products that are coming onto the market, clients are gradually beginning to appreciate the role insurance plays in their lives and in the full recovery of the economy.

Upon the introduction of the use of multi-currencies, the insurance industry responded by designing US dollar based products for the benefit of current and prospective clients. With these solutions, clients are now being paid in US dollars, an arrangement which has been well received. The efforts by the insurance industry need to be complimented by government and lawmakers. These institutions need to create an enabling environment, especially for life companies, since insurance is the diamond for growth in the country. The industry itself has been carrying out awareness campaigns to make people aware that despite all that has happened insurance still works and they cannot do without the protection it gives.

The industry recently went under the microscope as the Insurance and Pensions Commission scrupulously checked compliance with capital requirements by each of the players. Only a handful were found wanting and these are at various stages in the process of regularising their operations. The clean up exercise spurred an increase in the confidence levels of clients  in the insurance players as clients are aware that insurance players in Zimbabwe comply with the laws of the land and that there is a commission that has oversight over their operations which means clients’ portfolios are in safe hands.

Though the industry is on the rebound, the recovery is being retarded by the increase in cases of fraud and the continued escalation of claims costs. The industry through its associations is working on measures to counter incidences of fraud.