The latest 2nd quarter Ipec Life Assurance report confirms that, low disposable income, high unemployment rates and perception are some of the industry’s biggest challenges in writing new business.
The rise of the informal sector has made some of the traditional life insurance products redundant due to affordability, and failure to meet the needs and wants of the modern consumer.
The report shows that most life insurers have an over reliance on funeral products as the major source of income.
In the month of August alone, players in the industry launched more than four generic funeral cash plans, absent however, were micro pension schemes, savings plans or any other innovative life products. It was just a funeral cash plan after another funeral cash plan, the only difference being the company offering the product.
- Moonlight Funeral partners Old Mutual to launch funeral plan for low income earners
- Nyaradzo Life launches low cost funeral cover package
- Funeral Cash Plans dominate new micro-insurance products
- Netone launches mobile funeral cover
Lack of Innovation
ICTs and mobile phone technologies have provided insurers with the opportunity to create more innovative products, easily market their products and to facilitate research and development.
So why are carriers slow to adopt innovative technology systems that help them market their products and help them develop new life products?
The life insurance industry is trailing behind other industries when it comes to adopting digital tools and business models. Life insurers are slow adapters and underestimate the importance of social media platforms.
One the biggest Life Assurance Company in Fidelity Life is ominous by its absence on social media.
As the world continues to go digital, customers expect carriers to use platforms like social media to market insurance products and to communicate with their clients.
“Innovation in both product and distribution channels is highly encouraged and IPEC is prepared to support such developments,” the Commission said.
Lack of Diversity
The Commission is concerned by the lack of diversity in life products, and the limited distribution channels in use, and says it is ready to give a helping hand to those companies who are willing to be more innovative in their product menu’s and in making life insurance easily available to all Zimbabweans.
The latest second quarter Ipec report shows that fund business, funeral policies and group life assurance products contributed 88% of gross written premiums at 35%, 41% and 12% respectively.
Annuities with 4%, Term Insurance (3%) Endowment (1%) Pure Endowment (1%)
and Whole Life (2%) bundled together only contributed 12 percent of the GWP.
This has forced Ipec to encourage players to diversify their product menu and to consider new channels of distribution.
“There is an over reliance on fewer income streams. The Commission continues to encourage players to diversify their product menu,” Ipec said.
Ease of doing business
The Commission has come up with a raft of policies and measures to enable insurance firms to conduct their businesses prudently and is in the process of developing a micro-pension framework to help life insurers develop life insurance products that target the poor.
For the period ending 30 June 2017, life companies wrote USD171 million in net premiums
reflecting a 2% decrease from USD173 million realized in the quarter ending 30 June 2016.