Funeral Cash Plans dominate new micro-insurance products

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Nobody lives forever.

… as insurers use micro-insurance products to increase penetration

BY Tafadzwa Chidoori

The Zimbabwean insurance market has witnessed a surge in the introduction of micro-insurance products by players in the industry.

Operators in the Zimbabwean insurance industry have been launching micro-insurance products like flies dropping from the sky.

In the month of August alone, more than five micro-insurance products have been launched.

These micro-insurance products range from health, life and funeral assurance. However Funeral Cash Plans seem to have dominated the micro insurance products landscape.

Early this month Nyaradzo Life launched a low cost funeral cash Plan – Sahwira Lite. While Zimbabwe’s second largest Funeral Assurer Moonlight launched by far one of the most comprehensive low cost funeral plans in Zimbabwe by combining both funeral services and a cash plan – Moonlight Cash Plus.

In distress Psmas (The biggest Medical Aid Society in terms of membership) also introduced a lost cost medical aid scheme to increase health insurance penetration in low income earners -the Shield Plan.

Mobile Operators have been disruptors in the insurance industry introducing competitive, innovative and low cost mobile insurance products for their captive subscribers. Zimbabwe’s second largest Mobile Operator Netone with a subscriber base of about 4,7 million also joined the micro insurance party as it launched its own funeral cash plan, One Cover.

Statistics show that only 30% of the population in Zimbabwe has insurance cover and of the 30%, 70 percent is dominated by Funeral Assurance, which might explain the dominance of Funeral cash plans in new product development.

With Zimbabwe’s insurance penetration rate at a low of 1.7% micro insurance has been seen as a salvation for the dwindling insurance market.

The importance of micro insurance to the growth of the sector can non other be explained by the introduction in June this year, of a regulatory framework by Zimbabwe’s insurance regulator, the Insurance and Pensions Commission (Ipec) to govern the surge of micro-insurance products in the market.

The new regulatory framework seems to have opened the flood gates for micro insurance products. As the number of micro insurance product launches has increased since Ipec introduced the framework.

Big players in the insurance industry like Old Mutual and First Mutual have also joined the micro-insurance product launch frenzy.

The biggest Life Insurance company in Zimbabwe, Old Mutual partnered with Moonlight Funeral Assurance to underwrite the cash plan under their Moonlight Cash Plus product. Where as First Mutual are the underwriters of OneCover.

The shrinking economy, increased unemployment rates, low disposable income and the costs of general insurance has resulted in the contribution of the insurance to Zimbabwe’s GDP dwindling from a high of 6% in 2004 to the lowest of 1.7% in 2017.

Players in the industry are thus introducing micro-insurance products to improve penetration for insurance businesses in the country.

There is however, still a severe shortage of the much needed health micro insurance products. Leading many to question the ability of Zimbabwe’s actuaries in developing innovative low cost health insurance products that ensure that every Zimbabwean has access to at least basic health services without damaging the bottom line for insurers.

All eyes will be on the 2017, Third Quarter Ipec report, to see if the new product launches made any impact on Gross Written Premiums (GWP).

Watch this space for updates

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