DESPITE exhibiting resilience in the face of the devastating Covid-19 pandemic, Zimbabwe’s insurance and pensions sector continues to face numerous challenges that require industry players to be adaptive and innovative.
Strengthening business growth is imperative for the sector given its significance to the attainment of the ambitious United Nationals global sustainable development goals (SDGs) by 2030.
The sector’s operations have considerable relevance to key economic elements such as long-term investments, financial intermediation and capital markets developments.
These have a bearing on targeted global SDGs, to which Zimbabwe has made commitments.
They encompass the drive to end poverty for all, good health and wellbeing, quality education, gender equality and access to clean water and sanitation, among others.
With a combined gross premium written revenue at $7,61 billion as at March 2021 from ZW$1,42 billion last year, and a combined asset base valued at $61,4 billion, the insurance sector alone holds critical resources to unlock wider economic opportunity.
Similarly, the pensions sector had accumulated contributions of $2,86 billion as of March 2021 from $440 million in March last year, with an asset base clocking ZW$177,12 billion from ZW$29,81 billion, according to Insurance and Pension Commission (IPEC), As a source of such critical savings and, in line with Government’s five-year economic
blue-print, the National Development Strategy (NDS1-2021-2025), the insurance and pensions sector is expected to play a critical role in national economy development.
Incredible changes have recently hit the sector, some of which were long overdue and point to a more disruptive future, which necessitates important shifts in business modelling.
In Zimbabwe, insurance penetration is worryingly on the lower side, at less than three percent, a trend largely attributed to low consumer confidence due to loss of value linked to hyperinflationary legacy issues, says IPEC.
Reduced disposable incomes, largely due to company closures, retrenchments and lack of formal employment opportunities, are also straining the viability of the pensions sector.
IPEC Commissioner, Dr Grace Muradzikwa, has said the outbreak of Covid-19 and its disruption of supply and labour value chains, has compounded the situation – leading to waiver of contributions by employers in affected sectors. High levels of premium debtors and insurance fraud, also continue to exert pressure on the insurance and pensions
business space.
Amid this chain of challenges, the insurance and pensions sector has been urged to embrace the ‘disruptive’ digital innovation towards enhancing transparency and opening new avenues for improved business. Digitalisation presents a window of opportunity to rejuvenate business agility, Dr Muradzikwa admitted in a recent presentation during a
media training seminar jointly organised by IPEC and NSSA.
Industry players are already grappling with digital mainstreaming and this has “resulted in restructuring of key business functions…and operational efficiency,” she said.
The need for insurers to successfully engage more customers via richer digital platforms
and derive higher-impact products and services cannot be overemphasised. For instance,
Maisha Health Fund, Cassava Smartech Zimbabwe’s health insurance unit, recently
turned its medical aid cover digital by rolling out USSD-based service registration to the
public via mobile phone.
Besides enhancing more dynamic operations the digitally innovative and convenient
service has enabled Maisha to appeal to a wider business audience and facilitate a safer
and lower-risk environment, says Eddie Chibi, Cassava Smartech’s Chief Executive
Officer.
Access to healthcare services could be enhanced through paperless, digital solutions that
minimise cost and risk to members by restricting movement and physical contact, he
added.
“As a group, we are committed to serving where the need is greatest, and we believe
through such innovations we will be able to widen access and at the same time ensure
convenience, safety and healthcare affordability to many, using technology,” he said recently
.
Scope for digital innovativeness in the pensions and insurance sector could be higher,
drawing inspiration from strides the country has achieved so far in establishing a sound
e-commerce infrastructure base.
A latest World Bank Zimbabwe digital diagnostic report already shows Zimbabwe has
made significant digital advancements, including mobile money revolution, resulting in
about 7,1 million mobile wallet holders in a country of about 15 million.
It further notes the country has a relatively well-developed digital payment system,
where 96 percent of all transactions in the country’s formal sector are conducted
through digital means.
Due to the largely informal nature of the economy, limited gains are derived from digital
transformation growth potential, said the World bank. Recommendations for strategic
investments in digital skills and infrastructure, as well as accelerating creation of digital
platforms and entrepreneurship, have been made.
This is more imperative for the diverse insurance and pensions sector who should design
product services that speak to the restructured economic base and move beyond formal
client schemes to explore more access opportunities for the previously excluded groups,
including farmers, SME’s and those in the informal sector.
Buttressing the digitisation and innovation drive, multilateral auditing firm, Ernst &
Young Global Limited (EY) has highlighted five digital transformation opportunities that
insurers could harness to unlock new sources of revenue and enhance customer
experiences.
Citing growing incidents of unforeseen natural catastrophes linked to extreme climatic
conditions and their impact on macro-economic stability, widening gaps in savings and
social protection, as well as attendant shift in demographic patterns, EY has urged
insurers to develop solutions that protect people and industry while helping them to
reb
uild
after
catastrophic events.
Innovation, it said, is critical in helping insurers to operate more transparently, which
will make it easier to manage the business and win customer confidence.
“Better technology and richer data sets will enable underwriters to identify profitable
risks more quickly and assess market demand for new products more accurately. Insights
that take hours or minutes to generate today will be available in seconds tomorrow,” said
EY in a report issued February this year.
“Companies with innovative underwriting and claims platforms show greater market
share and stronger year-over-year results.”
According to the Postal and Telecommunications Regulatory Authority of Zimbabwe
(Potraz), Zimbabwe’s internet penetration has clocked 60 percent and by March 2021,
mobile internet and data traffic has risen by 30 percent spurred by the increased
adoption of digital platforms under the Covid-19 lockdown environment.
Insurance and pension service providers should ride on these digital capabilities and
fully adopt them to influence product development, smart marketing that strengthens
customer trust as well as enhance distribution of services through enhanced interaction
and knowledge sharing.
Credit Insurance Zimbabwe Limited (Credsure) business development analyst, Patrice
Chiremba, says their organisation is gravitating towards this new reality of in order to
keep afloat.
“Year 2020 has been tough because Covid-19 is not something we had prepared for.
Fortunately, we are an innovative company, so we improvised by developing a digital
platform called ‘auto-fill’, which is mainly for motor insurance where clients can easily
access insurance from the comfort of their homes.
Using this plaform, Chiremba said customers were able to check quotations, make
payments online, and do enquiries in a more interactive manner.
Similarly, Bulawayo-based youth entrepreneur, Leeroy Fredericks (34) has developed a
digital shopping platform, called ‘eGrossa Online’, which now offers Whatsapp-based
insurance payment service.
“The new online service allows users to buy their motor insurance and vehicle licensing
via Whatsapp and have their licensing disks delivered to their doorsteps in selected
cities,” he told Business Chronicle.
The Minister of ICT, Postal and Courier Services, Dr Jenfan Muswere, has said that digital
solutions across the spectrum, hold the key to sustainable economic transformation and
recovery from the adverse impact of the Covid-19 pandemic.
Commenting, ICT consultant Engineer Jacob Mutisi said: “The pension and insurance
sector should have more payments done through mobile platforms, have swipe and
online payments so that they can take advantage of those who are home because of
Covid-19.
“Zimbabwe should have more platforms creating competition to reduce the cost of
transacting. Imagine nine million people paying a $1 a month and the country’s
insurance is covered.”
Research insight from Standard Chartered Bank’s ‘Opportunity2030’ study conducted
early 2020 also reinforces the innovation imperative by stating that providing universal
digital access represents the greatest investment opportunity for the private sector,
including the insurance businesses.
“The biggest single opportunity across the African markets in the study is in increasing
dig
ital a
cces
s – a combination of mobile phone subscriptions rates and internet
connectivity,” it note-ebusiness.co.zw