COVID-19 pandemic has severely impacted Insurance sector- Industry guru speaks out!

Report by Noah Kupeta

The insurance and pensions industry is severely affected by the lethal disease-COVID 19 pandemic – a development that has negatively affected the performance of the sector, ZimSelector. Com Business Development director Zelina Francis has said.

ZimSelector.Com is one of Zimbabwe’s emerging and fastest growing digital Insurance and Pension Company established some few years ago with the aim of providing digital insurance and pension products primarily for people in the diaspora.

Zelina Francis told Zim Morning Post that the negative effects of the COVID-19 pandemic in Zimbabwe is a reflection of what is happening across the globe.

“The COVID-19 pandemic has severely impacted both sectors.

 “For Individuals, many have seen their income eroded because of reduced opportunity to earn income during the lock-down, have lost their jobs or are fearing their job security. 

“Insurance has  therefore, taken a lower priority in their hierarchy of needs. 

“For corporates, all sectors revenue have been adversely affected to varying degrees. 

“Consequently, there is a heightened cost-consciousness and many are taking much longer to pay premiums, with some requesting for payment holidays”, explains Zelina.

Many local pension funds across the world are finding it difficult to remain in business as a result of decreased cash flow brought about COVID 19.

This is because most pension funds for instance in Zimbabwe, are designed on a defined contribution (DC) plan where an employer, employee, or both make contributions on a regular basis.

Employers are increasingly finding it difficult to pay their employees who in return are failing to meet their insurance and pension premiums.

As such, defined contribution plans and future plans tend to fluctuate based on investment earnings.

However, Zimbabwe’s insurance and pension regulator –the Insurance and Pension Commission (IPEC) is defying all odds amid the escalating economic environment by tightening screws on all insurance companies to deliver.

In its quarterly report as at March 31 2020, IPEC has reported a bright future for the insurance and pension industry.

“The industry had a total asset base of $29.81 billion as at 31 March 2020, an increase of 80.33% in asset values recorded as at 31 December 2019.

“Investment property and equities continue to reprice faster than all other asset classes, thus diluting exposures to these assets.

“As a result, investment property and equities were valued at $24.64 billion, accounting for 82.67% of total industry assets”, notes IPEC.

In response to the COVID-19 pandemic, IPEC, working closely with the insurance industry has instituted a number of measures to ensure business continuity and sustainability of the sector. 

The measures include the call for business continuity plans from the industry through Circular 6 and 8 of 2020. The main purpose of the Circulars is to ensure business continuity and avoiding disruptions and delays in processing of benefits, continued accessibility of the industry to policyholders and pension scheme members to ensure timely payments of benefits and resolution of members’ queries and enquiries among others.

The African Union Centre for Disease, Prevention and Control has indicated that COVID 19 pandemic is on the increase in the continent.

According to the World Health Organisation, COVID 19 is not yet at its peak with statistics showing major casualties in America, Europe and Britain.