HARARE — Zimbabwe’s insurance sector is facing a widening inclusion gap, with formal insurance uptake declining despite broader gains in financial inclusion through banking and mobile money services, according to analysis of industry data published by State Media.
While more Zimbabweans are accessing formal financial services, insurance remains the notable exception, with fewer adults holding insurance policies compared to a decade ago.
The State Media reported that FinScope Zimbabwe’s 2022 consumer survey showed formal insurance usage declining from 26 percent in 2014 to 22 percent in 2022, even as bank account ownership increased from 30 percent to 46 percent over the same period.
Mobile money adoption also expanded from 45 percent to 63 percent, while overall financial inclusion rose from 69 percent to 84 percent.
However, the proportion of adults without any insurance cover — either formal or informal — increased from 70 percent to 72 percent.
With Zimbabwe’s adult population estimated at around seven million, insurance has become the only major component of financial inclusion showing contraction.
Data from the Insurance and Pensions Commission (Ipec) for the first quarter of 2026 indicates that Zimbabwe’s short-term insurance market remains heavily concentrated around motor vehicle cover.
Of the 769 625 policies held by direct short-term insurers as at March 31, 2026, motor insurance accounted for 675 299 policies, representing 88 percent of the total market.
The dominance of motor insurance reflects a market largely driven by legal compliance rather than voluntary risk protection, as third-party motor insurance is mandatory for vehicle owners.
Fire insurance and motor cover together account for a significant share of industry revenue, highlighting the concentration of insurance activity among vehicle owners, property owners and businesses.
Meanwhile, other forms of protection remain marginal, particularly among lower-income households that face greater vulnerability to economic shocks.
Despite low formal insurance penetration, many Zimbabweans continue to rely on alternative risk-sharing mechanisms, including burial societies, savings clubs, extended family networks, livestock ownership, church-based support systems and remittances.
These informal arrangements provide financial protection but are largely outside the regulated insurance framework.
The State Media quoted Ipec Commissioner Dr Grace Muradzikwa as saying the insurance industry must develop products that respond to the country’s changing economic structure, particularly the growth of the informal sector.
“We have a large underserved population; we have seen some structural shifts in our economy where we are seeing a growing informal sector, so we ask the industry, are you coming up with products that speak to this growing informal sector?” she said.
Dr Muradzikwa said insurers needed to create affordable products suitable for communities currently excluded from formal insurance.
“We have seen the recent fires at Matapi and Highfield, for instance. Are these people insured? The industry can come up with products that are relevant and digestible for the informal sector,” she said.
Zimbabwe’s short-term insurance sector has become increasingly aligned with foreign currency earnings.
The State Media reported that short-term insurers generated US$78,71 million in revenue during the first quarter of 2026, with approximately 80 percent of income — US$62,71 million — denominated in foreign currency.
Motor insurance contributed US$26,72 million of the foreign currency revenue, while fire insurance accounted for another significant share.
The trend reflects a widening divide between customers with access to United States dollar income and those whose earnings remain largely in local currency.
Funeral assurance, which serves a broader low-income market, has experienced the opposite trend. Foreign currency revenue represented only 57 percent of the sector’s income and declined year-on-year, while active policies dropped sharply.
Funeral assurance has traditionally been one of Zimbabwe’s most popular insurance products, but affordability pressures have weakened demand.
Active funeral policies declined by 29 percent in one quarter, falling from 114 651 to 81 528 policies.
Industry analysts say the decline reflects household financial pressures rather than a lack of awareness, as many families struggle to maintain regular premium payments.
FinScope data shows funeral cover remains the most preferred insurance product among those who are insured, with 72 percent holding funeral policies compared with 32 percent holding motor insurance and 30 percent medical aid.
However, affordability remains the biggest barrier, with half of uninsured adults citing cost as the main reason they do not have cover.
Zimbabwe’s insurance industry remains highly concentrated, with a small number of companies controlling a large share of the market.
In short-term insurance, Old Mutual, Nicoz Diamond, Cell, Zimnat and Alliance collectively account for about two-thirds of industry revenue.
The foreign currency segment is even more concentrated, with the top five insurers controlling approximately three-quarters of the market.
The funeral assurance market is similarly dominated, with Moonlight Funeral Assurance holding the largest share of sector assets and revenue.
Beyond affordability, industry observers say confidence remains a significant challenge for insurance companies.
The State Media quoted one policyholder, identified as Mr Sam Njani, who questioned the value proposition of insurance.
“I think insurance is a scam; a person can spend years faithfully paying subscriptions, but if they stop paying for three months or so, the policy lapses. It’s literally free money for these companies,” he said.
The distrust is linked partly to historical experiences during Zimbabwe’s hyperinflation period, when many insurance and pension values were severely eroded.
Despite growing climate-related risks, agricultural insurance has contracted.
The State Media reported that farming premiums declined by 25 percent year-on-year in 2026, while hail insurance premiums fell by 40 percent.
This comes despite improved rainfall patterns and stronger agricultural prospects compared with previous drought seasons.
Industry analysts suggest insurers may still be cautious following losses associated with previous drought-related claims.
At the same time, credit insurance recorded significant growth, increasing by more than 4 000 percent from a low base as businesses sought protection against customer and trading partner defaults.
Customer complaints against short-term insurers increased significantly during the period under review.
Complaints rose by 141 percent year-on-year, with delayed claims settlement accounting for the majority of grievances.
Liquidity challenges among some insurers have contributed to customer dissatisfaction, with several companies reporting negative working capital positions.
The State Media reported that some smaller insurers recorded disproportionately high complaint ratios compared with their market share.
Despite regulatory compliance among short-term insurers, Zimbabwe’s insurance market remains underdeveloped compared with regional and global benchmarks.
Insurance penetration was estimated at about 2 percent of GDP in 2024, below the sub-Saharan African average of 2,8 percent and significantly below South Africa’s estimated 11,5 percent.
Per capita insurance spending was estimated at US$144,71 in 2025, highlighting the limited scale of the sector.
Analysts say expanding insurance coverage will require products designed for informal businesses, affordable micro-insurance solutions, improved consumer trust and greater use of digital platforms.
As Zimbabwe’s economy continues shifting towards informal enterprise and new forms of financial participation, the insurance industry faces pressure to evolve from a market centred on vehicles and property owners into one capable of protecting the wider population.
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