BY MTHANDAZO NYONI
THE Insurance Council of Zimbabwe (ICZ) says the Covid-19 pandemic has shifted consumers’ insurance needs, leaving a significant number of traditional products on the domestic market irrelevant.
Changing consumer needs have been brought about by the emergence of new ways of life, such as the requirement for people to stay and work from home to avoid contagion, ICZ chief executive officer Tendai Karonga told reporters.
Insurers have to move with time, with those offering motor vehicle products, for instance, considering introducing services that take into account kilometres covered during a certain period, Karonga noted.
He spoke amid warnings by experts that insurance firms that will not be flexible will struggle under the new climate, while those agile enough to adapt would make it.
“Traditional insurance products on offer in Zimbabwe have become less relevant as they do not address new consumer needs,” Karonga said.
“For example, motor insurance covers that do not consider distance travelled with more people working from home and accessing goods and services online (are now less relevant).
“Accessing services like insurance has moved to online platforms for the middle to upper class consumers.
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“Financial inclusion efforts for the lower end of the market have intensified.”
The Covid-19 pandemic, which broke out in China at the end of 2019, has shifted people’s ways of life and exerted pressures on companies across industries to review how they do business.
The International Monetary Fund (IMF) predicted last year that the impact of the pandemic on the insurance sector would be multi-pronged.
“The grim impact of Covid-19 extensive financial dislocations across asset classes and potentially large increases in morbidity and mortality—could be challenging for insurers,” the IMF said.
“Life insurers could be hit particularly hard.
“Should mortality reach levels seen in large past pandemics such as the Spanish flu, payouts would be significant relative to capital for life insurers.
“Widespread asset-rating downgrades and persistently low interest rates would add to the difficult environment. In a scenario with widespread bond rating downgrades, regulators should closely monitor and reassess linkages to rating actions within supervisory frameworks, while enhancing supervision for insurers with risky holdings.”
Karonga said total gross premium written by short-term insurers during the half year ended June 30, 2021 amounted to $9,95 billion, reflecting a 262,84% increase from $2,74 billion reported during the comparable period in 2020.