The insurance sector in Zimbabwe is moving towards complete dollarisation, as per data from the Insurance and Pension Commission (Ipec). Industry participants wrote businesses worth approximately US$300 million in the previous year.
For short-term insurers in foreign currency, Gross premium written (GPW) increased by 42% to US$143.85 million. The main sources of foreign currency business were motor and fire insurance, which together made up 51% of the total business written during the period. Gross premium written (GPW) refers to the total amount an insurer writes during a specific period, before any deductions for expenses such as ceding and commissions.
Zimnat Lion, Old Mutual, Cell Insurance, Alliance and Nicoz Diamond Insurance dominated the market with a combined market share of 83% in terms of foreign currency-denominated GPW, NewsDay reported citing a report by Ipec. The Ipec report read in part:
Only motor insurance line of business had negative growth of 15%. Consistent with the 2021 trend in foreign currency-denominated business, the major classes of business written by short-term reinsurers were fire and motor insurance business contributing a combined 62% of the gross premium written for the year ended December 31, 2021.
The trend isn’t peculiar to the Insurance sector
The latest statistics availed by the Zimbabwe National Statistics Agency show that the whole economy is fast dollarising with 78% of transactions for food purchases now being done in foreign currency.
According to central bank governor John Mangudya, the financial industry in Zimbabwe has more US dollars than local currency. About 70% of the total deposits in the banks are in foreign currency, with the remainder being in Zimbabwe dollars.
This is mainly because the Zimbabwe dollar has been losing value against the USD since its reintroduction in 2019.