INSURANCE and Pensions Commission commissioner Grace Muradzikwa has emphasised the need for innovation and product diversification in Zimbabwe's insurance industry, citing concerns over the lack of relevant products for key sectors such as agriculture and mining.
According to her, the insurance industry is facing significant challenges, including high expense ratios, unsustainable business costs, and a lack of product diversification and innovation.
"We need to rethink our product relevance and innovation. Is there still a place for life insurance and pensions, or should we focus on coexisting with Nssa (National Social Security Authority), which is offering better benefits than we are?" Muradzikwa questioned.
She was delivering her keynote address at the inaugural Insurance Strategic Leadership Summit in South Africa on Wednesday.
"For example, during a recent commission board meeting, I was asked why we licensed two new companies," the commissioner said.
"The board members questioned what these companies were offering and whether they were simply entering the market to compete for third-party business.
"This raises important questions about whether we should focus on new product offerings and innovation when considering licences, rather than just capital and skills."
She added: "It is clear that there is a lack of product diversification and innovation in our industry. We are seeing the same products being offered repeatedly, despite significant market pressures.
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"For instance, in the life and funeral insurance sector, 73% of the business written by so-called life companies is actually funeral-related. This is concerning, especially when funeral insurers argue that life companies are encroaching on their space after failing in their own sector."
According to experts, life companies were once offering life and pension products but destroyed confidence in that sector by failing to pay pensioners.
Muradzikwa noted that the short-term insurance industry has surpassed the long-term sector in size, with motor insurance dominating the short-term sector.
She also emphasised the need for the industry to align itself with the growing sectors of the economy, such as agriculture and mining.
"While there is a lot of focus on agriculture, we have not developed sufficient products for the mining sector or smallholder farmers, which are key areas of opportunity," Muradzikwa said.
To address these challenges, Muradzikwa stressed the need for technological disruption, insights into customer behaviour, and data analytics.
"Our industry lacks the necessary skills in these areas, which are critical for innovation and compliance. We need to rethink our value chain, foster collaboration, and embrace digital transformation to remain relevant in a rapidly changing world," she said.
The summit, which ends on Friday, is running under the theme Rethinking Insurance for a New Era: Strategies for Zimbabwe Companies to thrive in a changing industry.
It was organised by the Insurance Institute of Zimbabwe.
