Zimbabwe’s insurance sector struggles with low penetration

Int’l desk: Zimbabwe’s insurance industry is showing signs of recovery in 2025, but structural weaknesses, low market penetration and reliance on a narrow range of products continue to constrain its long-term development.

Gross written premiums reached approximately US$1.32 billion, with projections suggesting the market could expand toward US$2.51 billion by year-end, driven largely by growth in non-life business. The non-life segment remains dominant, accounting for around US$1.45 billion, supported by strong demand in motor and fire insurance classes.

Short-term insurers recorded particularly strong performance in the first half of the year, with revenues rising 30% to ZiG 3.72 billion, according to industry data. Growth has been led primarily by motor and fire lines, which continue to form the backbone of insurance activity in the country.

Despite this momentum, overall insurance penetration remains low at approximately 2% to 2.5% of GDP, well below levels seen prior to Zimbabwe’s hyperinflation period, highlighting significant untapped potential in the market.

Zimbabwe’s life insurance sector offers a range of products, including term life, endowment, whole life, group life and credit life policies. However, funeral insurance continues to dominate the segment, accounting for roughly 68% of life premiums in 2025. Pension-linked and investment-oriented products remain underdeveloped, limiting the sector’s role in long-term savings and retirement planning.

In the non-life segment, insurers provide a broad suite of covers, including mandatory motor third-party liability, comprehensive motor insurance, property and fire insurance, marine cargo, liability, engineering and emerging microinsurance solutions. Health-related add-ons and personal accident covers also contribute to product diversity, although uptake remains uneven.

The sector is regulated by the Insurance and Pensions Commission (IPEC), which oversees compliance, consumer protection and market conduct.

Mandatory insurance requirements play a central role in sustaining premium volumes. Motor third-party liability insurance is compulsory for all vehicles under Zimbabwe’s Road Traffic Act, covering third-party bodily injury and property damage within regulated limits. In addition, certain employers must provide group life cover, while marine insurance may be required in specific trade contexts.

Insurance contracts operate under the principle of utmost good faith, requiring full disclosure of material facts prior to policy inception. Failure to disclose relevant information or cases of misrepresentation can result in reduced claim payouts or policy avoidance. Standard exclusions typically include intentional acts, war, nuclear risks and gradual wear and tear.

Claims activity in Zimbabwe is largely driven by motor accidents, reflecting road conditions and traffic density, as well as property-related losses from fires, floods and storms. Health-related claims and liability events also contribute to overall claims volumes.

Motor and fire classes account for the majority of short-term insurance payouts, with industry data indicating rising claims volumes alongside improving settlement performance. However, claim denials remain a concern in some cases, often linked to non-disclosure, late notification, incomplete documentation, suspected fraud or policy exclusions.

Premium pricing across the market remains risk-based, with regulatory oversight applied to compulsory motor tariffs. Comprehensive motor and property premiums are influenced by asset values, location, driver history and exposure to specific risks, while life and health premiums are largely determined by age and sum assured.

Although no-claims bonuses are available in certain segments, inflationary pressures, currency volatility and rising claims costs continue to drive premium adjustments. This environment has created affordability challenges and may be contributing to persistently low penetration levels.

Zimbabwe’s insurance sector continues to face structural challenges, including limited consumer trust, low uptake beyond mandatory products and heavy concentration in funeral and motor insurance. Unclaimed pension benefits and weak long-term savings mechanisms also highlight gaps in financial inclusion.

However, opportunities for growth remain. Reforms under the National Development Strategy 2 (NDS2), combined with digital innovation, expansion of microinsurance and stronger enforcement of compulsory covers, could support deeper market penetration over time.