Zimbabwe’s life assurance crisis: Economic instability, outdated products, and vanishing trust

PHILLIMON MHLANGA

Turmoil. Economic volatility. Shrinking market share. Outdated products failing to meet needs.

Insurance penetration has dropped dramatically, from 5.7% in 2004 to just 1.5%–2.6%. The industry is struggling to adapt, and insurers are losing touch with their customers.

Inflation is rising. Unemployment continues to climb. Disposable incomes are disappearing. Insurance premiums, especially life assurance, are no longer affordable or a priority.

“People are no longer in a position to commit to long-term life asurance policies,” says Grace Muradzikwa, the Insurance and Pensions Commissioner.

“The traditional life policies are simply not suitable for today’s economy, where incomes are unpredictable and inflation is high.”

Many Zimbabweans are unable to continue paying premiums, causing policy lapses to soar. Trust in the industry is deteriorating. “The traditional life insurance products are no longer relevant to a majority of Zimbabweans,” says David Kudakwashe Mnangagwa, the deputy minister of Finance, Economic Development and Investment Promotion.

“The economy has shifted, but the products haven’t kept up with those changes.”

Zimbabwe’s life assurance sector continues to rely heavily on traditional policies, but these products no longer resonate with consumers. Long-term life policies, such as whole life and term insurance, are no longer practical for people facing economic uncertainty.

“The long-term, rigid nature of these policies does not work for many people anymore,” says Grace Muradzikwa.

“The shift in the economy requires more adaptable and flexible products.” Zimbabweans, particularly in the informal sector, need coverage that fits their unpredictable incomes and shorter-term financial commitments.

The informal sector now contributes to around 60% of the country’s GDP, but these workers remain largely underserved by traditional life insurance products. “More people are working in the informal sector, making it difficult to offer traditional insurance policies,” explains Mavukeni Rufai, Secretary General of the Life Offices Association of Zimbabwe. These workers, often without access to employer-backed insurance, need more affordable and flexible options, something that traditional life insurance products struggle to provide.

With fewer formal businesses operating, fewer employer-sponsored plans are available. As a result, many workers are left without coverage, further compounding the challenges faced by the insurance sector.

The biggest hurdle for life insurers is regaining consumer trust. With many people disillusioned by past experiences of devalued policies and slow payouts, insurers must work harder to show that they can deliver on their promises.

“The trust gap is wide,” says Muradzikwa. “If insurers want to survive, they need to rebuild that trust with transparency, clear communication, and faster payouts.”

Innovation is also critical. Micro-insurance products designed for lower-income individuals and those in the informal sector could provide an entry point for insurers to tap into a largely neglected market.

“We need to look at more flexible products, like micro-insurance, that can be more responsive to the needs of Zimbabweans,” says Mnangagwa. These products are more affordable and accessible to the population, addressing both the trust and flexibility gaps that traditional policies cannot.

Digital solutions are also emerging as a solution.

“Mobile technology is transforming the insurance landscape,” explains Mnangagwa.

“With the increasing use of mobile money and mobile payments, insurers can offer affordable products directly to the consumer, especially those in remote areas who may not have access to formal insurance services.”

Mobile-based life assurance could be a game-changer, providing coverage with minimal premiums and simplifying the claims process for consumers.

The road to recovery for Zimbabwe’s life assurance sector is long and fraught with challenges. Insurers must adapt to the changing economic climate and address the growing irrelevance of traditional products. Innovation, digitalization, and micro-insurance present significant opportunities, but without restoring consumer trust, these efforts will be in vain.

“The life assurance industry needs to innovate or risk losing even more ground,” says Rufai.

“The market is changing, and if insurers don’t evolve with it, they will be left behind.”

To survive, life insurers must address the demands of today’s economy and consumers. More affordable, flexible products, better transparency, and faster payouts are key to rebuilding trust.

By embracing change and responding to the needs of a shifting market, Zimbabwe’s life assurance sector may yet find its way forward.