Agric insurance brings stability to farmers

Lazarus Sauti

EVERY time climate-induced drought wrecks Zimbabwe, the media is saturated with pictures of wilting crops and dry pastures strewn with carcasses of livestock.

These pictures confirm that climate change is real and farmers are losing their crops and livestock.

Armyworms invasions, pests, and diseases are further compounding the problem for farmers, especially smallholder ones who contribute over two-thirds of the total agricultural output in the country.

Unfortunately, they are more vulnerable to climate risks since they do not have the resources to take preventive measures or absorb shocks.

“Rainfall variability, harsh weather conditions, and chronic droughts have badly affected most families here in Hwedza,” said Sarah Makoni, a smallholder farmer in Gonese, a village in Hwedza District in Mashonaland East Province of Zimbabwe.

She added that most smallholder farmers in her area, just like others in semi-arid provinces such as Manicaland, Masvingo, Mashonaland Central, Matabeleland North, and Matabeleland South, depend on rain-fed agriculture, and as such climate change is rapidly threatening sustained agricultural productivity, food security, and inclusive development.

“We have lost our livestock, thanks to climate-induced droughts. Our livestock was exposed to diseases. Though we used various indigenous knowledge techniques like sanitation, vaccination, and early treatment of diseases, we failed to handle catastrophic losses,” Makoni said, adding that the Covid-19 pandemic has worsened the food insecurity situation in her area.   

In its recently published 2020 Rural Livelihoods Assessment Report, the Zimbabwe Vulnerability Assessment Committee (ZimVac) said the economic recession and Covid-19 have also pushed more than 5 million Zimbabweans in rural areas into abject poverty.

ZimVac, in partnership with the World Food Programme (WFP), United Nations Children Fund (UNICEF), as well as Food and Agriculture Organisation (FAO) added that these people require 807 232 tonnes of grain to be food secure.

For the Joint Meeting of the Southern African Development Community (SADC) Ministers responsible for Agriculture and Food Security, Fisheries, and Aquaculture, Covid-19 and climate-induced droughts have pushed fragile member-states closer to the abyss of famine.

The Council of Ministers, therefore, urged member-states to work towards the implementation of resilience-building initiatives, improving early warning and response mechanisms, and contingency planning to lessen the impacts of human security threats such as Covid-19 and food shortages.

“SADC member-states should expand social safety nets and social protection measures for the poor and vulnerable, as well as adopt and embrace risk transfer strategies in form of agriculture insurance for crops and livestock,” said the Council of Ministers.

Launching a virtual Insurance and Pensions Journalists Mentorship 2020 Programme organised by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) recently, IPEC Commissioner, Grace Muradzikwa said agriculture insurance for crops and livestock brings stability in production by protecting farmers from the vagaries of the weather and climate.

“Agriculture insurance for crops and livestock helps to allay the impact of systemic risks by providing the much-needed protection and also contributing to the timely recovery in case a disaster strikes,” she said.

“This would help keep smallholder farmers out of poverty and enable them to invest in their future.”

Muradzikwa further said her organisation approved Prescribed Asset (PA) status – an investment in projects of national importance – towards agriculture financing worth Z$250 million this year.

“This approval is consistent with the government’s policy to increase crop and livestock production and help Zimbabwe to become an Upper Middle Income Economy by 2030,” she added.

Muradzikwa said despite the significance of insurance in stimulating inclusive development, a recent baseline survey by IPEC showed that only 34 percent of Zimbabweans have insurance of some sort, 76 percent of which are in respect of funeral insurance policies.

“The prevailing low uptake of insurance products stems from the current Covid-19 pandemic, retrenchments, company closures, high unemployment levels, hyperinflation, high levels of premium debtors, liquidity challenges, and insurance fraud,” she added.

Insurance Council of Zimbabwe (ICZ) Executive Officer, Tendai Karonga said although Zimbabwe’s economy is agro-based, with agriculture contributing about 17 percent to the Gross Domestic Product (GDP) and about 60 percent of raw materials to the manufacturing industry, the low uptake of agriculture insurance for crops and livestock is exposing citizens to food shortages.

“Despite the agricultural sector being one of the major drivers of the economy, its consumption of insurance service is very minimal contributing 1.45 percent to the Gross Premium Written (GPW) for the period January to June 2020,” he said.

Karonga added that the Covid-19 pandemic, lack of insurance products that address the needs of smallholder farmers, mistrust in insurance services, and reliance on traditional self-insurance in risk and loss management are some of the factors affecting the uptake of agricultural insurance in the country.

“Thin profit margins in the sector, particularly for small-scale commercial and subsistence farmers and lack of knowledge on the benefits of insurance and risk management services, are other factors inhibiting the uptake of agricultural insurance for crops and livestock,” he added.

True to Karonga’s assertions, Makoni is skeptical about insuring her crops and livestock, citing inadequate information on agriculture insurance and its importance.

“I am not aware of agriculture insurance and its importance,” she told insure263.co.zw. “I think those who are involved in selling agriculture insurance are not reaching out to smallholder farmers in remote areas.”

Conversely, ICZ – an independent self-governing association of short-term insurers and reinsurers in Zimbabwe duly registered by IPEC – said it is carrying out public awareness and educational campaigns on insurance products and services as one of its key activities.

“We are urging insurers to offer community-based agriculture insurances for the smallholder farmers, taking advantage of economies of scale concept,” Karonga said.

He added that IPEC, as the regulator of the insurance sector, is working on a framework to introduce weather index-based agriculture insurance aimed at boosting the uptake of agriculture insurance for crops and livestock in the country.

For agricultural extension officer, Lissom Ngwazani, agriculture insurers should increase their branch network in all farming areas to enhance the uptake of their products and services.

“Communication is key,” he said. “Agriculture insurers should invest in communication and solicit feedback from farmers on a continued basis to consistently meet customer needs and enhance service delivery.”

Ngwazani also urged agriculture insurers to collaborate with financial institutions that provide agricultural finance to boost efficiency in service delivery.

“For instance, as financial institutions assess financed agricultural projects, they can also be collecting data relevant for insurance underwriting; at the same time, insurance premiums can be paid through the banks and policies issued within bank premises. Insurers and financial institutions can thus benefit from each other’s client base,” he added.

To Information Technology (IT) expert, Mike Sakupwanya, the use of new media tools in promoting agricultural insurance has the potential to facilitate client uptake, reduce transaction costs, and improve the efficiency of the insurance process.

He, therefore, urged smallholder farmers like Makoni and others in the country to take advantage of mobile phone-based insurance products such as Moovah Crop Insurance cover and Moovah Livestock Insurance cover respectively.

Moovah Crop Insurance covers crop destruction by windstorms, uncontrollable pests, stray animals, fire, and frosts while Moovah Livestock Insurance covers livestock from death, accidental injuries, or theft.

Kenya-based insurance practitioner, David Kimwei said while Covid-19 affected the uptake of agricultural insurance in Kenya and other African states, the pandemic has made agricultural insurers to adopt online platforms to issue policies and enhance customer service delivery.

“The insurance sector in Africa, which was slow in adopting technology, embraced online platforms not only to fight the pandemic, but also to improve efficiency and enhance customer service delivery,” he said.

Kimwei continued: “The mantra was clear: adapt, embrace, and grow or remain stagnant and perish. The agricultural insurance sector in Africa adapted and embraced technology to make their services and products more accessible to new and existing customers and to build and improve insurance products and service models.”

IPEC Insurance Director, Sibongile Siwela said while Zimbabwe’s insurance sector lacks robust operational information technology (IT) systems, the insurance sector has invested in technology to flatten the Covid-19 curve, reach new markets, make insurance accessible to existing customers, and leverage cross-industry collaborations.

“Insurance companies are using digital platforms such as Facebook, Twitter, and webinars (Zoom and Microsoft teams) to fight the Covid-19 pandemic as well as to optimise costs, decrease premiums, and allow many of the uninsured to take up insurance tailored to their socio-economic and geographic circumstances,” she said.

Sharing the same sentiments, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) Director-General, Gift Machengete added that digital technologies have ensured business continuity at a time mobility was restricted in Zimbabwe and other countries.

“Businesses embraced digital technologies for information dissemination and for forecasting. They held virtual meetings, cutting on costs associated with physical meetings,” he said.

IT specialist, George Magombeyi, however, bemoaned the low uptake of agriculture insurance in rural areas and blamed it on low internet penetration in rural and peri-urban areas in Zimbabwe.

“This low internet penetration is caused by poor Information and Communication Technology (ICT) infrastructure, connectivity issues, expensive data bundles, and digital illiteracies,” he added.

Magombeyi also said IT security measures of most insurance companies in the country exclude remote systems access and this restricts access to e-platforms for all aspects of the insurance business.

He, therefore, encouraged agriculture insurers and other players in the insurance sector to be mindful of asymmetric market power, cyber-crime, online misinformation, data privacy, and platform dominance if they are to benefit from digital platforms.

Twitter: @lazarussauti @insure263

Pension funds stimulate development

Lazarus Sauti

NATIONAL Social Security Authority (NSSA) Chief Investments Officer, Isaac Isaki said pension funds are driving investments and stimulating sustainable socio-economic development in Zimbabwe.

He added that his organisation’s investment portfolio is valued at ZWL$30.48 billion and spread across a wide spectrum of asset classes and industries shares, including equities, properties, offshore investments, and fixed income.

“The Authority has a diverse property portfolio comprising industrial, commercial (retail, offices, and mixed-use), residential, medical facilities and land banks earmarked for future development,” Isaki said.

He further said these properties are 110 in total and they include NSSA House, Celestial Park, Social Security Centre, Pomona Shopping Centre, Bindura Shopping Centre, Chipinge Shopping Centre, Ekusileni Hospital, Beitbridge Hotel, and Compensation houses across the country.

“NSSA is one of the largest portfolios investing on the Zimbabwe Stock Exchange (ZSE) controlling up to 10 percent of the ZSE’s market capitalisation.

“In USD terms, the Authority’s portfolio is valued at US$449.6 million,” Isaki said.

He continued: “Notwithstanding the harsh economic climate in the country, the Authority’s investments have performed remarkably well.

“Key achievements include generated $18 billion in unrealised capital gains through adept stock selection, generated USD1.18 million in NOSTRO dividend from offshore investment in Afreximbank, and growth of investment income from $47.5 million in 2019 to a massive $375 million boosted by dividend income arising from active investor company engagements.”

Isaki added that NSSA successfully restructured its fixed-income portfolio to reduce exposure to monetary assets that were yielding negative returns.

“We diversified our foreign holdings through an additional US$1.7 million into a regional reinsurance company, and also achieved a 7-fold growth or 711 percent growth in investment performance from ZWL$2.7 billion in January 2020 to ZWL$21.77 billion by October 2020, bettering inflation and exchange rate movements,” he said.

“NSSA also achieved 75 percent general occupancy for the entire portfolio outperforming the property industry average.”

The strategic mandate of NSSA’s investment function is simply to invest the excess of contributions over pay-outs in investments which provide real returns to grow the reserves of the scheme sustainably.

The Authority’s investment values are focused on four strategic themes, namely Income, Growth, Impact, and Sustainability (‘IGIS’).

“NSSA’s investment must generate sustainable income streams to cover benefit obligations and fund operating costs in the ordinary course of business,” Isaki said.

“The Authority also targets assets that preserve value through providing for real growth that surpasses the inflation and growth in benefit obligations.”

NSSA Acting General Manager, Arthur Manase added that the Authority’s investment generates substantial socio-economic impact within a fiduciary and market-return context, and also contribute to the sustainability of the schemes and NSSA as a whole.

“The new NSSA is guided by accountability, transparency, and good governance. Thanks to these three pillars, NSSA’s investment portfolio grew by over 1 000 percent during the first half of this year,” he said.

Manase added: “NSSA’s investment activities are governed by the National Social Security Act [17:04], especially Sections 28 and 19; Public Finance Management Act [22:19], particularly Section 48; and Investment Policy Statement and procedure manuals.

“International Social Security Guidelines (‘ISSA Guidelines’) on investments, Actuarial Valuation Guidelines, Public Entities Corporate Governance Act [10:31], and other Government Policies as pronounced from time to time also govern the Authority’s investment activities.”

For Zimbabwe Association of Pension Funds (ZAPF) Director-General Sandra Musevenzo, while the pension funds sector controls a significant portion of the country’s commercial real estate, it should not stop investing but should seek new opportunities.

She said pension funds companies should diversify their investments choices in infrastructure developments and other projects of national importance, including sufficiently partaking in prescribed assets.

“Pension funds need to diversify from owning large office buildings and shopping malls and perhaps go more into warehouses as electronic commerce (e-commerce) is the new norm,” Musevenzo said.

She added that the other opportunity for pension funds is to plough into other property sectors like health facilities (hospitals and clinics).

Insurance and Pensions Commission (IPEC) Director for Pension Supervision, Cuthbert Munjoma added that pensions funds companies should modernise and embrace new investments outside the traditional asset classes to ensure the security of invested funds.

“They can also revise their investment policies to ensure their investment philosophies are informed by prevailing economic trends,” he said.

Investing in infrastructure is essential in rebooting Zimbabwean economies and pension funds should invest locally to improve infrastructure development, said African Development Bank (AfDB) president, Akinwumi Adesina.

“There are sovereign wealth and pension funds that invest in money market instruments outside of the African continent. That money should be invested locally to improve infrastructure on the continent,” he added.

Adesina also said any investments, such as those made in infrastructure, should be done to create sustainable jobs.

While delivering his opening address at the Infrastructure South Africa (ISA) Project Preparation Round-Table and Market Place at Gallagher Convention Centre recently, South African president Cyril Ramaphosa also said pension funds play a significant role in stimulating sustainable socio-economic development.

“Pension funds, banks, businesses, and social partners play an essential role to unlock investment and growth, drive industrialisation and create employment opportunities,” he said.

“Pension funds should focus on bankable projects such as water and sanitation, energy, transport, agriculture, agro-processing, human settlement, and digital infrastructure.”

Follow: @lazarussauti @insure263

People-centred development tonic to Zim’s transformation

Lazarus Sauti

IN his book, The Governance of China III, Chinese President Xi Jinping said the people were the greatest strength to governance, the creators of history, and the fundamental force for determining the future of the country.

He also said the Chinese government came from the people, had its roots in the people and served the people.

“People are a vital force in championing development. We are, therefore, addressing the most pressing issues essential to our people’s immediate interests to stimulate and achieve political, economic, socio-cultural, and eco-environmental development,” Jinping said.

“We always put our people first, base our efforts on their interests, listen to them, draw on their wisdom, and ensure the principal status of Chinese.”
China has lifted over 700 million of its citizens from poverty because of its people-centred developmental programmes.

As the Zimbabwean government is pushing towards attaining an upper-middle income economy by 2030, it should not only strengthen the system of governance but also fight poverty and inequality, and also put in place measures to ensure public wellbeing.

The government should constantly improve the wellbeing of Zimbabweans through productive investment, the creation of decent employment, the equal distribution of resources, and the promotion and protection of fundamental human rights and freedoms.

The biggest problems facing the Zimbabwean society today include violation of human rights and the widening gap between unbalanced and inadequate development and the ever-growing expectation of Zimbabweans for a better life.

Despite abundant natural resources, the country remains one of the poorest States in Africa, with an unemployment and underemployment rate of around 95%.

Because of this, most Zimbabweans are living below the international poverty line of US$1,90 a day.

Systemic corruption and mismanagement are also worsening the country’s economic crisis.

To fight corruption and close the inequality gap, the government should commit to the principle of serving Zimbabweans wholeheartedly over and above promoting sustained, inclusive, and fair socio-economic growth, job creation, productive investment, and trade.

The United Nations Development Programme (UNDP), the UN’s global development network, which promotes technical and investment co-operation among nations, also said people’s wellbeing and their quality of life are an important measure of whether “inclusive development” is attainable.

“People must be at the centre of human development, both as beneficiaries and as drivers as individuals and in groups,” UNDP noted, adding that states must empower their citizens with the tools and knowledge to build better communities.

For Croatian diplomat, politician, and law scholar, Ivan Simonovic, human rights should be at the centre of all people-centred governance and development initiatives because they set minimum standards to encourage better decision-making and pro-poor outcomes.

Simonovic urged States like Zimbabwe to improve democratic institutions, enhance accountability, transparency, and good governance, and fight corruption.

“The response of the government on political, socio-economic, and gender challenges should be credible and coherent, with human rights as the baseline,” he said.

As Jinping clearly noted in his book, the government should be close to people, and work vigorously by their side through thick and thin to realise, safeguard, and develop their fundamental human rights, freedoms, and interests.

Zimbabweans are suffering because of poverty, unemployment, and inequality — evils that feed on each other — and the government should make genuine efforts to address these concerns and warm people’s hearts.

In his book, A Fine Madness, writer Mashingaidze Gomo noted that Zimbabwe and other African States urgently needed policies that generate decent jobs which pay enough for people to survive and thrive.

Decent jobs are conducive to social cohesion and inclusion and participation are essential to sustained, inclusive, and fair development.

Gomo added that running a resource-rich country like Zimbabwe was a momentous responsibility and as such the government should fully commit to the people and never fail them.

Focus should be on poverty reduction, crisis prevention and recovery, people-centred governance, and environment and inclusive development.

More so, government leaders should put aside their interests and devote their all to stimulate Zimbabwe’s political, economic, and socio-cultural development as well as enhance the quality of development to better meet the growing expectations of Zimbabweans in all areas – NewsDay, November 25, 2020.

COVID-19 and life assurance: global threat, new opportunities

Lazarus Sauti

THE global COVID-19 pandemic and the ensuing instability in market conditions are affecting the life assurance sector in Zimbabwe and other countries.

Given the uncertainty that exists in these unique times, life assurers are facing both short-term and long-term challenges to sustain business continuity and profitability, a fact supported by the Insurance and Pensions Commission (IPEC) commissioner, Grace Muradzikwa.

“The COVID-19 pandemic has not only reduced the uptake of insurance products, but it has also increased expenditure to capacitate employees from working from home,” Muradzikwa said.

She added that the COVID-19 crisis has affected the 12 registered life assurance entities in the country.

Life Offices Association of Zimbabwe member, Reginald Chihota also said the life assurance sector in Zimbabwe has seen a drop in business because of the COVID-19 pandemic situation.

“The drop was caused by the continuous erosion of disposable incomes of people because of the COVID-19 pandemic,” he said, adding that the COVID-19 crisis has brought an immediate cash and liquidity crunch to life offices.

Chihota further said measures put in place to flatten the COVID-19 curve have limited the ability to complete new life assurance business applications and underwriting.

“Life assurance consumers are facing temporary and/or permanent unemployment and loss of income because of the COVID-19 pandemic. This has affected the appetite for purchasing new life assurance products,” he added.

For Kenya-based insurance practitioner, David Kimwei, the life assurance market in his country has also faced operational and economic challenges brought about by the global COVID-19 pandemic.

“These confronts have negatively affected on new life assurance business, premium payments, and continuation of existing policies,” he told insure263.co.zw in an interview.

Deloitte, in its paper COVID-19 impact to life insurance and annuity companies added that the shock to the economy and markets caused by the pandemic is having an earth-shattering impact on the life assurance sector.

“Interest rates and equity markets have declined, credit spreads have widened, and implied volatilities have increased,” Deloitte noted, adding that each of these movements have affected fixed income and equity investments and the life products insurers sell, creating balance sheet and earnings volatility.”

Global threat, new opportunities

Kimwei said the COVID-19 pandemic has not only threatened the health and economic securities, but it has also presented new opportunities for life assurers to adopt technology and sustain business continuity and profitability.

“The adoption of technology has enhanced service delivery, and this is a plus for the life assurance sector that is poised to grow through increased usage of technology for improved efficiency and customer service delivery,” he said.

Deloitte also noted that the rapid shift to virtual operations has forced increased collaboration between finance, Information Technology (IT), and life assurance companies to meet business needs and continued operations.

“This swift transition to virtual operations has also presented an opportunity for life assurance companies to speed up future-of-work initiatives,” Deloitte noted. “Remember, the global pandemic has provided evidence that increased flexibility can work.”

Chihota concurred: “The COVID-19 crisis has allowed life assurers to come out with novel digital solutions such as new products and digital signatures to triumph over the handicap of the traditional selling approach.

“The innovative digital solutions are likely to prompt an increase in hacking attempts by poor actors seeking to get customer data, siphon off financial information, or disrupt services.”

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NSSA reaching out to the vulnerable

Lazarus Sauti

BRITISH entrepreneur, human rights activist, and environmental campaigner, Anita Roddick said the business of business should not be about money, but about responsibility.

She added that the business of business should be about public good, not private greed.

Motivated by Roddick’s sentiments, the National Social Security Authority (NSSA) – the statutory corporate body tasked by the government of Zimbabwe to provide social security to Zimbabweans – is showing that its business is not about money but responsibility.

Constituted and established in terms of the NSSA Act of 1989 [Chapter 17:04], the organisation is showing empathy, leadership, and responsibility through its Corporate Social Responsibility (CSR) – a concept based on integrating socio-economic, ethical and environmental concerns in business operations.

In 2018, for instance, NSSA launched Project Dzimba, a responsibility initiative aimed at providing homes suitable for paraplegics and quadriplegic pensioners under its Accident Prevention and Workers Compensation Scheme (APWCS).

“The APWCS is a scheme established in terms of Statutory Instrument (SI) 68 of 1990 for the provision of financial relief to workers and their dependents when a worker is injured or killed in a work-related accident or suffers from a work-related disease or dies thereof,” said NSSA Chief Social Security Officer, Tambudzai Jongwe.

NSSA Acting Director for Contributions, Collections and Compliance, Agnes Masiiwa added that the scheme covers all workers in the formal sector, but excludes civil servants, domestic workers, and informal sector workers.

“The scheme provides financial services to disabled workers to reduce their disablement, and to return them to their former employment or otherwise prepare them for a useful and meaningful place in society,” she said.

The move to construct customised houses, under the Project Dzimba initiative, across the country was made after the realisation that disabled pensioners were living in deplorable environments detrimental to their health and wellbeing.

Ninety-six (96) pensioners from all corners of the country, including Rungano Matanga, have benefited from the project, an added initiative that is delivered over and above traditional benefits that are covered under APWCS.

Matanga applauded NSSA for transforming his life and that of his family.

“NSSA lifted my family from absolute poverty,” he said. “The organisation not only reduced my disablement; it improved my life and that of my family.”

NSSA Chief Occupational Safety and Health Officer, Betty Nyereyegona said her organisation is targeting rural communities to ease poverty and improve the lives of injured pensioners.

“In sync with Section 30 of the Constitution of Zimbabwe, we are taking practical measures to provide social security and social care to injured pensioners in rural areas and also those who are in need. We are providing them with food and building them houses and social facilities such as toilets,” she said.

She added: “As you know, most of the injured pensioners like Matanga end up living in rural areas because of various reasons. We are, therefore, making follow-ups to ensure that we rehabilitate them, build them new houses, and also improving their living conditions.”

NSSA is also engaging workers’ unions in the country to increase awareness on safety and health, especially among informal traders.

“Even though the informal sector is not yet under our armpit, we are engaging players in the informal sector as we disseminate our life-transforming information,” she said.

“Our Corporate Social Responsibility initiatives are obvious demonstrations that we are focused on promoting Occupational Safety and Health (OSH) in workplaces, and building capacities by raising awareness and delivering training to our stakeholders.”

NSSA runs a Workers’ Compensation Rehabilitation Centre, an institution which was established in 1971.

“The centre aims to enhance and restore functional ability and quality of life to those with impairments and disabilities resulting from work-related injuries and diseases,” Nyereyegona said.

She also said the unique centre, the only one of its kind in Zimbabwe, comprises departments such as Physiotherapy, Occupational Therapy, Industrial Clinic, Paraplegic Unit, Social Work, Vocational Training, Maintenance, Kitchen, and Laundry in the same campus and sharing a common administration department.

“The Centre – which is in the city of Bulawayo, next to Mpilo Central Hospital – serves as a referral centre for patients derived from the whole country, and it has a capacity of 200 clients who can be attended with 70 of them being in-patients,” she said.

“It delivers high quality and comprehensive clinical treatment, which includes therapeutic and skills training for injured workers to enable them speedy reintegration into society and work situations.”

As part of its CSR, NSSA refurbished a ventilator at Mutare Provincial Hospital and also availed two of its facilities, the Beitbridge Hotel and Ekusileni Hospital in Bulawayo, for use as a COVID-19 quarantine centre and a treatment centre, respectively.

NSSA also invested ZWL$50 million towards capacitating Ekusileni Hospital. Post COVID-19, the hospital will be converted to a training centre for specialist doctors in collaboration with the National University of Science and Technology (NUST).

Twitter: @lazarussauti @insure263

COVID-19 shredded Zim culture, funeral assurance sector

Lazarus Sauti

“I was in Nairobi, Kenya, when my father died. Due to the COVID-19 induced travel restrictions, I could not attend the funeral wake to pay my last respects,” said Martin Rupfunde.

“Culturally, I was supposed to be at my old man’s funeral to honour him and perform certain cultural rites as dictated by our beliefs. Unfortunately, COVID-19 robbed me of the chance to travel back to Rupfunde, a village in Buhera North in the Manicaland Province of Zimbabwe, to give my father, a firm believer of our Shona culture, a fitting funeral,” he said.

“I was grieving alone, a difficult and abnormal feature of bereavement.”

Rupfunde said his father was buried within hours in line with COVID-19 health guidelines. This robbed relatives and friends of a chance to grieve together as well as console each other.

Mdara (old man) was buried like a dog. Imagine! Because of social distancing rules, less than 50 people, mostly family members, attended his funeral to extend their sympathies, but they barely interacted,” he said.

“As I followed his burial on WhatsApp, I concluded that I have not only lost my pillar of strength but part of our Shona culture too. COVID-19 has dramatically re-shaped our long-standing rituals of honouring the dead,” he said.

“While he succumbed to a long battle with cancer, the old man died in an unusual ‘new world’ order.”

In Zimbabwe and other African countries, people treat events surrounding death as key cultural events.

For instance, the corpse is bathed, oiled, and laid at home for body viewing before burial.

“This process, known as wake keeping, is being discouraged. Traditional practices such as ‘nyaradzo’ and ‘kurova guva’ are also being discouraged to protect the lives of citizens and the vulnerable,” said traditional leader, Zefa Mutauto.

He added: “We are seeing fewer mourners and less time at funerals. Although it is strange, these funerals are comparatively cheap as compared to elaborate and expensive ones which burden the grieving family.”

COVID-19 also disrupted funeral and memorial services as well as religious rites in other parts of the world.

In the United States of America (USA), funeral and memorial services are being held in front of close family members; in Italy, traditional funeral services are deemed illegal to stem further spread; in Mexico, cremations are depriving many of velorios or wakes; in India, there are no more funeral pyres on the Ganges River; and in Jewish states, the Muslim ritual of bathing the deceased, well-known as ghusl, is being skipped to protect people from the virus.

For Insurance and Pensions Commission (IPEC) Commissioner, Grace Muradzikwa, COVID-19 has not only affected culture and faith but the funeral assurance business.

“The pandemic reduced the uptake of insurance products in Zimbabwe. Our recent survey revealed that only 34 percent of Zimbabweans have insurance of some sort, 76 percent of which are regarding funeral assurance policies,” she said.

Zimbabwe Association of Funeral Assurers (ZAFA) General Manager, Taka Svosve, added that COVID-19 affected premium collection since most companies, including banks, were closed at the first stage of the lockdown.

“Transactions were not flowing since there was an abrupt stop to most business activities when President Emmerson Mnangagwa introduced the first 21 days of lockdown in March this year. Some companies and individuals suddenly stopped generating income,” he said.

“It, therefore, became difficult for funeral assurers to receive or follow-up on their premiums from both individual and group clients resulting in some unexpected shocks in cash flows.”

Svosve also said the marauding inflation in the country eroded premiums and on top of that, it was difficult for funeral assurers to review their premiums during the peak of the lockdown.

“Both group and individual clients had their incomes curtailed because of the COVID-19-induced lockdown and could, therefore, not meet any new increases in premiums,” he said.

“Funeral assurers had no option but to defer any premium review to the detriment of their cash flows and operational obligations.”

Svosve said since funeral assurers rely on visiting and meeting with potential clients for new business, COVID-19-induced lockdown also restricted them, and this badly affected the operations of funeral assurers.

“When incomes of both individuals and corporates are suddenly cut as what happened and still happening during this COVID-19 pandemic, naturally getting new business for funeral assurers gets immediately affected. Sadly, funeral insurance is pushed to the bottom of the priority list under the circumstances,” he said.

Insurance expert, Innocent Tinarwo said there has been mixed reaction in terms of how funeral assurance as a business has been affected by COVID-19 in Zimbabwe. 

“Without a doubt, the demand and awareness for funeral assurance policies have gone up a bit because people have realised that anything can happen anytime and they need to be ready when disaster strikes,” he told insure263.co.zw. “However, it is difficult to attribute a surge in demand for funeral policies to COVID-19 only.”

Tinarwo further said in most cases, funeral assurance businesses in Zimbabwe were returning a sizeable chunk of risks and now they are seeking reinsurance.

“Funeral assurance companies are no longer returning all the risks, but spreading risks,” he said. “When funeral assurers spread risks, prices of funeral policies also go up.”

Tinarwo added that while the cost of funeral policies skyrocketed globally, the story is different in Zimbabwe.

He also said the COVID-19 pandemic has exposed some flaws in the traditional laws that govern burials in as far as funeral policies are concerned.

“Some provisions in the Burial and Cremation Act [Chapter 5:03] are now outdated and the COVID-19 pandemic exposed them. Stakeholders should quickly ratify these provisions,” he said.

Kenya-based insurance practitioner, David Kimwei said the Kenyan funeral assurance market also faced various challenges brought about by the COVID-19 pandemic.

He added that COVID-19 made funeral assurers in Kenya and other African states to adopt online platforms to issue policies and also process claims.

“The insurance sector in Africa, which was slow in adopting technology, embraced online platforms to fight the pandemic, improve efficiency, and enhance customer service delivery,” Kimwei said.

He added: “The mantra was clear: adapt, embrace, and grow or remain stagnant and perish. The insurance sector in Africa adapted and embraced technology to make funeral insurance more accessible to existing customers and to build and improve insurance products and service models.”

IPEC Insurance Director, Sibongile Siwela said while Zimbabwe’s insurance sector lacks robust operational information technology (IT) systems, funeral assurers and other insurance companies invested in technology to reach new markets, make insurance accessible to existing customers, and leverage cross-industry collaborations.

“Insurance companies are using digital platforms such as Facebook, Twitter, and webinars (Zoom and Microsoft teams) to optimise costs, decrease premiums, and allow many of the uninsured to take up insurance tailored to their socio-economic and geographic circumstances,” she said.

Conversely, IT specialist, George Magombeyi bemoaned low internet penetration in rural and peri-urban areas in Zimbabwe because of poor Information and Communication Technology (ICT) infrastructure, connectivity issues, expensive data bundles, and digital illiteracies.

He added that IT security measures of most insurance companies in the country exclude remote systems access and this restricts access to e-platforms for all aspects of the insurance business.

Magombeyi also urged players in the insurance sector to be mindful of asymmetric market power, cyber-crime, online misinformation, data privacy, and platform dominance if they are to benefit from digital platforms.

As COVID-19 progresses and while the world is adapting to the ‘new normal’, will this wave change the way Zimbabweans and/or Africans grieve for good? Only time will tell.

Twitter: @lazarussauti @insure263

Agric insurance brings stability to farmers

Lazarus Sauti

EVERY time climate-induced drought wrecks Zimbabwe, the media is saturated with pictures of wilting crops and dry pastures strewn with carcasses of livestock.

These pictures confirm that climate change is real and farmers are losing their crops and livestock.

Armyworms invasions, pests, and diseases are further compounding the problem for farmers, especially smallholder ones who contribute over two-thirds of the total agricultural output in the country.

Unfortunately, they are more vulnerable to climate risks since they do not have the resources to take preventive measures or absorb shocks.

“Rainfall variability, harsh weather conditions, and chronic droughts have badly affected most families here in Hwedza,” said Sarah Makoni, a smallholder farmer in Gonese, a village in Hwedza District in Mashonaland East Province of Zimbabwe.

She added that most smallholder farmers in her area, just like others in semi-arid provinces such as Manicaland, Masvingo, Mashonaland Central, Matabeleland North, and Matabeleland South, depend on rain-fed agriculture, and as such climate change is rapidly threatening sustained agricultural productivity, food security, and inclusive development.

“We have lost our livestock, thanks to climate-induced droughts. Our livestock was exposed to diseases. Though we used various indigenous knowledge techniques like sanitation, vaccination, and early treatment of diseases, we failed to handle catastrophic losses,” Makoni said, adding that the Covid-19 pandemic has worsened the food insecurity situation in her area.   

In its recently published 2020 Rural Livelihoods Assessment Report, the Zimbabwe Vulnerability Assessment Committee (ZimVac) said the economic recession and Covid-19 have also pushed more than 5 million Zimbabweans in rural areas into abject poverty.

ZimVac, in partnership with the World Food Programme (WFP), United Nations Children Fund (UNICEF), as well as Food and Agriculture Organisation (FAO) added that these people require 807 232 tonnes of grain to be food secure.

For the Joint Meeting of the Southern African Development Community (SADC) Ministers responsible for Agriculture and Food Security, Fisheries, and Aquaculture, Covid-19 and climate-induced droughts have pushed fragile member-states closer to the abyss of famine.

The Council of Ministers, therefore, urged member-states to work towards the implementation of resilience-building initiatives, improving early warning and response mechanisms, and contingency planning to lessen the impacts of human security threats such as Covid-19 and food shortages.

“SADC member-states should expand social safety nets and social protection measures for the poor and vulnerable, as well as adopt and embrace risk transfer strategies in form of agriculture insurance for crops and livestock,” said the Council of Ministers.

Launching a virtual Insurance and Pensions Journalists Mentorship 2020 Programme organised by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) recently, IPEC Commissioner, Grace Muradzikwa said agriculture insurance for crops and livestock brings stability in production by protecting farmers from the vagaries of the weather and climate.

“Agriculture insurance for crops and livestock helps to allay the impact of systemic risks by providing the much-needed protection and also contributing to the timely recovery in case a disaster strikes,” she said.

“This would help keep smallholder farmers out of poverty and enable them to invest in their future.”

Muradzikwa further said her organisation approved Prescribed Asset (PA) status – an investment in projects of national importance – towards agriculture financing worth Z$250 million this year.

“This approval is consistent with the government’s policy to increase crop and livestock production and help Zimbabwe to become an Upper Middle Income Economy by 2030,” she added.

Muradzikwa said despite the significance of insurance in stimulating inclusive development, a recent baseline survey by IPEC showed that only 34 percent of Zimbabweans have insurance of some sort, 76 percent of which are in respect of funeral insurance policies.

“The prevailing low uptake of insurance products stems from the current Covid-19 pandemic, retrenchments, company closures, high unemployment levels, hyperinflation, high levels of premium debtors, liquidity challenges, and insurance fraud,” she added.

Insurance Council of Zimbabwe (ICZ) Executive Officer, Tendai Karonga said although Zimbabwe’s economy is agro-based, with agriculture contributing about 17 percent to the Gross Domestic Product (GDP) and about 60 percent of raw materials to the manufacturing industry, the low uptake of agriculture insurance for crops and livestock is exposing citizens to food shortages.

“Despite the agricultural sector being one of the major drivers of the economy, its consumption of insurance service is very minimal contributing 1.45 percent to the Gross Premium Written (GPW) for the period January to June 2020,” he said.

Karonga added that the Covid-19 pandemic, lack of insurance products that address the needs of smallholder farmers, mistrust in insurance services, and reliance on traditional self-insurance in risk and loss management are some of the factors affecting the uptake of agricultural insurance in the country.

“Thin profit margins in the sector, particularly for small-scale commercial and subsistence farmers and lack of knowledge on the benefits of insurance and risk management services, are other factors inhibiting the uptake of agricultural insurance for crops and livestock,” he added.

True to Karonga’s assertions, Makoni is skeptical about insuring her crops and livestock, citing inadequate information on agriculture insurance and its importance.

“I am not aware of agriculture insurance and its importance,” she told insure263.co.zw. “I think those who are involved in selling agriculture insurance are not reaching out to smallholder farmers in remote areas.”

Conversely, ICZ – an independent self-governing association of short-term insurers and reinsurers in Zimbabwe duly registered by IPEC – said it is carrying out public awareness and educational campaigns on insurance products and services as one of its key activities.

“We are urging insurers to offer community-based agriculture insurances for the smallholder farmers, taking advantage of economies of scale concept,” Karonga said.

He added that IPEC, as the regulator of the insurance sector, is working on a framework to introduce weather index-based agriculture insurance aimed at boosting the uptake of agriculture insurance for crops and livestock in the country.

For agricultural extension officer, Lissom Ngwazani, agriculture insurers should increase their branch network in all farming areas to enhance the uptake of their products and services.

“Communication is key,” he said. “Agriculture insurers should invest in communication and solicit feedback from farmers on a continued basis to consistently meet customer needs and enhance service delivery.”

Ngwazani also urged agriculture insurers to collaborate with financial institutions that provide agricultural finance to boost efficiency in service delivery.

“For instance, as financial institutions assess financed agricultural projects, they can also be collecting data relevant for insurance underwriting; at the same time, insurance premiums can be paid through the banks and policies issued within bank premises. Insurers and financial institutions can thus benefit from each other’s client base,” he added.

To Information Technology (IT) expert, Mike Sakupwanya, the use of new media tools in promoting agricultural insurance has the potential to facilitate client uptake, reduce transaction costs, and improve the efficiency of the insurance process.

He, therefore, urged smallholder farmers like Makoni and others in the country to take advantage of mobile phone-based insurance products such as Moovah Crop Insurance cover and Moovah Livestock Insurance cover respectively.

Moovah Crop Insurance covers crop destruction by windstorms, uncontrollable pests, stray animals, fire, and frosts while Moovah Livestock Insurance covers livestock from death, accidental injuries, or theft.

Kenya-based insurance practitioner, David Kimwei said while Covid-19 affected the uptake of agricultural insurance in Kenya and other African states, the pandemic has made agricultural insurers to adopt online platforms to issue policies and enhance customer service delivery.

“The insurance sector in Africa, which was slow in adopting technology, embraced online platforms not only to fight the pandemic, but also to improve efficiency and enhance customer service delivery,” he said.

Kimwei continued: “The mantra was clear: adapt, embrace, and grow or remain stagnant and perish. The agricultural insurance sector in Africa adapted and embraced technology to make their services and products more accessible to new and existing customers and to build and improve insurance products and service models.”

IPEC Insurance Director, Sibongile Siwela said while Zimbabwe’s insurance sector lacks robust operational information technology (IT) systems, the insurance sector has invested in technology to flatten the Covid-19 curve, reach new markets, make insurance accessible to existing customers, and leverage cross-industry collaborations.

“Insurance companies are using digital platforms such as Facebook, Twitter, and webinars (Zoom and Microsoft teams) to fight the Covid-19 pandemic as well as to optimise costs, decrease premiums, and allow many of the uninsured to take up insurance tailored to their socio-economic and geographic circumstances,” she said.

Sharing the same sentiments, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) Director-General, Gift Machengete added that digital technologies have ensured business continuity at a time mobility was restricted in Zimbabwe and other countries.

“Businesses embraced digital technologies for information dissemination and for forecasting. They held virtual meetings, cutting on costs associated with physical meetings,” he said.

IT specialist, George Magombeyi, however, bemoaned the low uptake of agriculture insurance in rural areas and blamed it on low internet penetration in rural and peri-urban areas in Zimbabwe.

“This low internet penetration is caused by poor Information and Communication Technology (ICT) infrastructure, connectivity issues, expensive data bundles, and digital illiteracies,” he added.

Magombeyi also said IT security measures of most insurance companies in the country exclude remote systems access and this restricts access to e-platforms for all aspects of the insurance business.

He, therefore, encouraged agriculture insurers and other players in the insurance sector to be mindful of asymmetric market power, cyber-crime, online misinformation, data privacy, and platform dominance if they are to benefit from digital platforms.

Twitter: @lazarussauti @insure263

NSSA compliance for transport operators now mandatory

Lazarus Sauti

NICHOLAS Dhedhedhe, who stays in Mabvuku, a high-density suburb in Harare, was a commuter omnibus driver who enjoyed his work.

For a decade, he plied the 215.24 km Harare-Nyamapanda route.

Tragedy struck when Dhedhedhe was involved in a road traffic accident near Chivake Bridge on one of his trips.

Fortunately, no one perished as a result of the crash but Dhedhedhe sustained serious leg injuries.

“I was injured when my commuter omnibus veered off the road, hit a tree, and overturned near Chivake Bridge along Harare-Nyamapanda Road. My right leg had to be amputated because of this accident,” he told insure263.co.zw.

Dhedhedhe added that his family is also bearing the brunt of the accident’s effects, a fact supported by the World Health Organisation (WHO) in its 2011 World Report on Disability.

The international public health institution noted that persons with disabilities (PWDs) and their families suffer a permanent decline in quality or standard of life.

As fate would have it, Dhedhedhe’s employer was not really forthcoming in as far as ensuring the welfare of his employee was concerned.

He vanished after paying the first hospital bill, leaving Dhedhedhe at the mercy of a harsh economic environment.

“I feel used and neglected,” he said. “Now I am wallowing in poverty because I cannot work due to continued ill health.”

Because of the lack of social security coverage, Dhedhedhe is now relying on donations from well-wishers, friends, and sometimes his neighbours.

Social protection refers to the protection which society provides for its members through a series of public measures, against the socio-economic distress that otherwise would be caused by the stoppage or considerable reduction of earnings resulting from unemployment, sickness, employment injury, old age, and death.

Dhedhedhe could not benefit from pension or social security coverage because public and commercial transport operators were not contributing to the National Social Security Authority (NSSA), an organisation constituted and established in terms of the NSSA Act of 1989 to provide social security and social care to those who are in need.

These operators are now required to produce a valid NSSA Clearance Certificate when applying for permits to operate as the government seeks to ensure that workers in this sector are covered by a statutory pension fund.

This is according to a joint statement released by the NSSA and Ministry of Transport and Infrastructural Development (MoTID) recently.

“We now require all public and commercial transport operators to be holders of a valid NSSA Clearance Certificate prior to the renewal or application of an operating transport permit or license,” read the NSSA and MoTID joint statement.

NSSA’s Clearance Certificate is an official document issued by the authority to registered employers liable for NSSA contributions, under any of the Acts administered by the authority.

The Clearance Certificate, which is issued upon request from employers whose contribution accounts are up-to-date, also acts as assurance that the trading partner’s employees are adequately covered by social security schemes enshrined under Section 12 of the Accident Prevention and Workers’ Compensation Scheme, established in terms of Statutory Instrument (S.I.) 68 of 1990.

Transport minister, Joel Biggie Matiza said most drivers and conductors who are injured at work are struggling to make a living as they are financially constrained.

“Accordingly, this move by NSSA and the government, through my ministry, is a welcome development to enhance their safety and social security,” he said, adding that public and commercial transport operators should regularise their standing with NSSA to avoid delays in issuing their operating licenses.

NSSA has already engaged the Zimbabwe United Passenger Company (ZUPCO) – a road transport company incorporated and registered in Zimbabwe with the mandate to provide rural, urban, and regional passenger travel services – to ensure that commuter omnibuses operating under the transport company can only be engaged after producing a NSSA clearance certificate.

Public transport driver, Gody Muza applauded NSSA and MoTID for coming up with this noble idea.

“As public drivers, we were facing the problem of social security exclusion. We were vulnerable to poverty,” he said. “However, the move by NSSA and MoTID is a blessing to us. Our safety and social security are now prioritised and enhanced.”

For NSSA Chief Social Security Officer, Tambudzai Jongwe, most Zimbabweans are without cover against life cycle risks such as disability, sickness, and work-related injuries.

She added that absence of safety and social security cover against these risks not only traps them in endless poverty but also leads to social exclusion.

“Safety and social security coverage for commercial and public transport operators, therefore, prevent increased risk of workers falling into poverty because it provides income to them when they face contingencies,” Jongwe added.

For long, commercial and public transport operators ran their businesses without complying with the National Social Security Authority (Pension and other Benefits Schemes), 1993 (S.I. 393 of 1993) and Social Security (Financial and Accounting) (Amendment) Regulations, 1990 (S.I. 60 of 1990), which compels them to register and contribute towards their employees’ pension and compensation in the unfortunate event of a work-related injury, illness, or death.

Twitter: @lazarussauti @insure263      

Covid-19, business interruption and short-term insurance in Zimbabwe

Lazarus Sauti

IN December 2019, cases of pneumonia were detected in Wuhan, China, and reported to the World Health Organisation (WHO) on the 31st of December 2019.

These pneumonia-like symptoms caused by severe acute respiratory syndrome coronavirus were then named Covid-19.

As of 8 October 2020, WHO confirmed 36 002 827 Covid-19 global confirmed cases with 1 049 810 people succumbing to the virus.

“Out of 36 002 827 Covid-19 global confirmed cases, 1 212 396 were recorded in Africa,” WHO noted, adding that Zimbabwe recorded 7 951 cases with 229 patients succumbing to the virus.

To combat the spread of Covid-19, Zimbabwe responded through national lockdown, social distancing, closing its borders, and self-quarantining measures.

These measures promulgated in Statutory Instrument (SI) 83 of 2020, SI 93 of 2020, SI 94 of 2020, SI 99 of 2020, and SI 136 of 2020, greatly subdued economic activities in the country.

The Confederation of Zimbabwe Industries (CZI), the umbrella body of the manufacturing industry in Zimbabwe, revealed in its August 2020 report that there was low demand for goods and services in the country due to Covid-19 containment measures.

Launching a virtual Insurance and Pensions Journalists Mentorship 2020 Programme organised by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) recently, IPEC Commissioner, Grace Muradzikwa said Covid-19 also negatively affected the insurance and pension sector in Zimbabwe.

“The Covid-19 pandemic reduced the uptake of insurance and pension products in the country,” she said, adding that contribution arrears were aggravated by the pandemic.

Muradzikwa further said the Covid-19 pandemic not only led to long turnaround times in processing benefits but also increased expenditure to capacitate insurance employees from working from home.

The Insurance Council of Zimbabwe (ICZ) – an independent self-governing association of short-term insurers and reinsurers in Zimbabwe duly registered by IPEC – also noted that Covid-19 affected the performance of the short-term insurance sector in Zimbabwe.

“The short-term insurance business has not been operating at the expected level, characterised by low uptake of products and services, the slow movement of premium, as well as inadequate information on some of the claims lodged as assessors were not able to go out during the lockdown period because of the restrictions on people movement,” ICZ Executive Officer, Tendai Karonga said.

He also said that the impact of Covid-19 on the short-term insurance sector in the country cannot be separated from political, economic, and social challenges such as inconsistent monetary policies, collapsed demand for goods and services, high inflation, high-cost environment, political unrest, and drought.

“Short-term insurance classes such as motor insurance, fire insurance, and engineering insurance registered negative real growth due to Covid-19 and high inflation induced by currency reforms,” Karonga added.

He said motor insurance is one of the large classes of insurance in Zimbabwe contributing 29.45 percent for the period January to June 2020 to the total Gross Premium Written (GPW) of the Non-Life insurance.

“This class was affected since Covid-19 lockdown restricted local and cross border traffic movement; the level of traffic was greatly subdued in April 2020 when the lockdown restrictions were imposed,” Karonga said.

“One of the ICZ insurance pools negatively affected by restricted regional cross-border traffic was the Motor Insurance Pool. As of August 2020, 59 percent of the budgeted premium was collected. In comparison to the same period in 2019, there was a decrease of 37 percent in premiums collected.”

He continued: “Performance of motor insurance was further affected by the Central Vehicle Registry’s (CVR) inability to register vehicles due to lack of financial resources to produce registration plates.

“This resulted in about 80 000 unregistered and uninsured vehicles on the roads leading to a loss of the mandatory Third-Party Motor premiums of approximately ZWL$60 million, according to the CVR Registrar’s Report to the Parliamentary Transport Committee on 28 September 2020.”

Karonga said the fire insurance class was also badly affected as consumers of this class are mostly corporates in the service and manufacturing sectors whose operations have been interrupted by the Covid-19 pandemic.

“Fire insurance contributed 29.03 percent to the total GPW for the period January to June 2020, but registered a decline of -1.3 percent in terms of real growth compared to the same period in 2019 due to Covid-19,” he said.

On engineering insurance, Karonga said Covid-19 delayed the completion of various national construction projects like the Beitbridge Highway and independent power stations in the country.

“Extension of completion time due to national lockdown also means an extension of insurance policies and probably increased premiums depending on policy terms and conditions as well as negotiations with insurers,” he added.

Karonga also said other short-term insurance classes like aviation, bonds or guarantees, hire purchases, marine, miscellaneous accident, personal accident, and personal liability registered negative real growth, thanks to Covid-19 and other factors.

“While the Covid-19 lockdown contributed to the decline in performance, the general decline in the economic growth of the country has taken a toll on the performance of corporates who are the main consumers of short-term insurance products culminating in reduced uptake of insurance covers. Some corporates are now relying on self-insurance,” he said.

Karonga added that the decline in Aviation and Hire Purchase business to some level reflects the drop in demand for aviation service and retail goods during the lockdown period.

“Marine and Aviation, as well as accident classes as part of transportation insurances, were negatively affected by the grounding and suspension of movement under lockdown,” he said.

Muradzikwa said notwithstanding the Covid-19 pandemic and macroeconomic challenges, the insurance industry remained resilient, a fact supported by Elite Risk Acceptances Managing Director, Christelle Colman, who added that Covid-19 forced many individuals and short-term insurance businesses to embrace technological change.

“The Covid-19 pandemic has forced all stakeholders in the insurance business to swiftly introduce the use of virtual meetings, to promote the use of digital platforms and social media, and to normalise remote working,” she said.

“These changes have improved short-term insurance business efficiency and productivity.”

Addressing a ministerial roundtable meeting at the ongoing International Telecommunications Union Digital World 2020 conference in Geneva, Switzerland, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) Director-General, Gift Machengete also said digital technology ensured business continuity at time mobility was restricted.

“Businesses embraced digital technology for information dissemination and for forecasting. They held virtual meetings, cutting on costs associated with physical meetings,” he said.

At a webinar hosted by Cenfri and the Digital Frontiers Institute (DFI), Pravin Kalpage of Hollard said digital technology stimulated digital sales, for instance, call-centres or end-to-end mobile sales during this Covid-19 times.

“Hollard managed to sell 3 million policies with its technology partner Econet, using only a digital interaction,” he said.

Kalpage said the use of digital technology not only helped with the selling and processing of insurance policies digitally, but also enhanced the accuracy and efficiency of underwriting, risk assessment, and claims processing.

However, transitioning to digital engagement with short-term customers remains a challenge in Zimbabwe and other African countries because most customers are accustomed to face-to-face engagements and in-person interaction.

Because of this, it remains difficult to build sufficient trust with most short-term consumers through digital interaction.

In a journal paper Evaluating Factors Affecting Supply of Short-Term Insurance in Botswana, Paul Guruwo said greater investment in consumer education, communication, and technology is needed to build trust and maintain digital engagement with customers.

“Short-term insurers should open more channels of interacting with existing and potential customers to enable the address of questions, provision of information and/or advice, and handling customer feedback,” he said.

Guruwo further urged insurance companies in general and short-term insurance companies to be specific to enhance cybersecurity protocols to protect their customers and also to simplify their policy documents so that consumers are able to easily understand and interpret them.

Agric insurance brings stability to farmers

Lazarus Sauti

EVERY time climate-induced drought wrecks Zimbabwe, the media is saturated with pictures of wilting crops and dry pastures strewn with carcasses of livestock.

These pictures confirm that climate change is affecting farmers as they are losing their crops and livestock.

Armyworms invasions, pests, and diseases are further compounding the problem for farmers, especially smallholder ones who contribute over two-thirds of the total agricultural output in the country.

Unfortunately, they are more vulnerable to climate risks as they do not have the resources to take preventive measures or absorb shocks.

“Rainfall variability, harsh weather conditions, and chronic droughts have badly affected most families here in Hwedza,” said Sarah Makoni, a smallholder farmer in Gonese, a village in Hwedza District in Mashonaland East Province of Zimbabwe.

She added that most smallholder farmers in her area and other provinces like Manicaland, Masvingo, Mashonaland Central, Matabeleland North, and Matabeleland South depend on rain-fed agriculture, and as such climate change is rapidly threatening sustained agricultural productivity, food security, and socio-economic development.

“We have lost our livestock, thanks to climate-induced droughts. Our livestock was exposed to diseases. Though we used various indigenous techniques like sanitation, vaccination, and early treatment of diseases, we failed to handle catastrophic losses.”

In its recently published 2020 Rural Livelihoods Assessment Report, the Zimbabwe Vulnerability Assessment Committee (ZimVac) said the economic recession and Covid-19 also pushed more than 5 million Zimbabweans in rural areas into abject poverty.

ZimVac, in partnership with the World Food Programme (WFP), United Nations Children Fund (UNICEF), Food and Agriculture Organisation (FAO) added that these people require 807 232 tonnes of grain to be food secure.

The Joint Meeting of the Southern African Development Community (SADC) Ministers responsible for Agriculture and Food Security, Fisheries, and Aquaculture also said Covid-19 and climate-induced droughts pushed fragile member-states closer to the abyss of famine.

The Council of Ministers, therefore, urged member-states to work towards the implementation of resilience-building initiatives, improving early warning and response mechanisms, and contingency planning to lessen the impacts of food shortages.

“SADC member-states should expand social safety nets and social protection measures for the poor and vulnerable, as well as adopt and embrace risk transfer strategies in form of agriculture insurance for crops and livestock,” said the Council of Ministers.

Launching a virtual Insurance and Pensions Journalists Mentorship 2020 Programme organised by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) recently, IPEC Commissioner, Grace Muradzikwa said agriculture insurance for crops and livestock brings stability in production by protecting farmers from the vagaries of the weather and climate.

“Agriculture insurance for crops and livestock helps to allay the impact of systemic risks by providing the much-needed protection as well as contributing to the timely recovery in case a disaster strikes,” she said.

“This would help keep smallholder farmers out of poverty and enable them to invest in their future.”

Muradzikwa further said her organisation approved Prescribed Asset (PA) status – an investment in projects of national importance – towards agriculture financing worth Z$250 million this year.

“This approval is consistent with the government’s policy to increase crop and livestock production and help Zimbabwe to become an Upper Middle Income Economy by 2030,” she added.

Insurance Council of Zimbabwe (ICZ) Executive Officer, Tendai Karonga said although Zimbabwe’s economy is agro-based, with agriculture contributing about 17 percent to the Gross Domestic Product (GDP) and about 60 percent of raw materials to the manufacturing industry, the low uptake of agriculture insurance for crops and livestock is exposing citizens to food shortages.

“Despite the agricultural sector being one of the major drivers of the economy, its consumption of insurance service is very minimal contributing 1.45 percent to the Gross Premium Written (GPW) for the period January to June 2020,” he said.

Karonga added that lack of insurance products that address the needs of smallholder farmers, mistrust in insurance services, and reliance on traditional self-insurance in risk and loss management are some of the factors affecting the uptake of agricultural insurance in the country.

“Thin profit margins in the sector, particularly for small-scale commercial and subsistence farmers and lack of knowledge on the benefits of insurance and risk management services, are other factors inhibiting the uptake of agricultural insurance for crops and livestock,” he added.

Makoni is skeptical about insuring her crops and livestock, citing inadequate information on agriculture insurance and its importance.

She thus encouraged stakeholders in the agriculture insurance sector to increase public awareness campaign activities on their products and services.

ICZ – an independent self-governing association of short-term insurers and reinsurers in Zimbabwe duly registered by IPEC – said it is carrying out public awareness and educational campaigns on insurance products and services as one of its key activities.

“We are urging insurers to offer community-based agriculture insurances for the smallholder farmers, taking advantage of economies of scale concept,” Karonga said.

He added that IPEC, as the regulator of the insurance sector, is also working on a framework to introduce weather index-based agriculture insurance aimed at boosting the uptake of agriculture insurance for crops and livestock in the country.

For agricultural extension officer, Lissom Ngwazani, agriculture insurers should increase their branch network in all farming areas to enhance the uptake of their products and services.

“Communication is key,” he said. “Agriculture insurers should invest in communication and solicit feedback from farmers on a continued basis to consistently meet customer needs and enhance service delivery.”

Ngwazani also urged agriculture insurers to collaborate with financial institutions that provide agricultural finance to boost efficiency in service delivery.

“For instance, as financial institutions assess financed agricultural projects, they can also be collecting data relevant for insurance underwriting; at the same, insurance premiums can be paid through the banks and policies issued within bank premises.

“Insurers and financial institutions can thus benefit from each other’s client base,” he added.

To Information Technology (IT) expert, Mike Sakupwanya, the use of new media tools in promoting agricultural insurance has the potential to facilitate client uptake, reduce transaction costs, and improve the efficiency of the insurance process.

He, therefore, urged smallholder farmers like Makoni and others in the country to take advantage of mobile phone-based insurance products such as Moovah Crop Insurance cover and Moovah Livestock Insurance cover respectively.

Moovah Crop Insurance covers crop destruction by windstorms, uncontrollable pests, stray animals, fire, and frosts while Moovah Livestock Insurance covers livestock from death, accidental injuries, or theft.