‘Design insurance products that respond to the needs that people have’

Welcome to Insurance Explained, a thought leadership podcast brought to you by the Insurance Institute of Zimbabwe (IIZ) and produced by Heart and Soul Broadcasting. Hosted by Andy Hodges, this platform is designed to demystify insurance, rebuild public trust in the sector, and elevate professional understanding through clear, honest, and practical conversations. Rather than relying on technical jargon or regulatory complexity, the show brings together industry experts to break down insurance in simple, accessible terms—addressing real concerns and asking the tough questions that matter. In this episode, Hodges (AH) is joined by Douglas Hoto (DH), Group Chief Executive Officer of First Mutual Holdings, for an insightful and candid discussion.

AH: Welcome, Douglas Hoto, the Group Chief Executive Officer of First Mutual Holdings.

Douglas Hoto (DH): Thank you.

AH: Now, I know, of course, as the Group CEO of First Mutual, insurance runs through your blood, if I can say it that way.

But there is one thing that is prevalent out there in the Zimbabwean community, and that's the belief that insurance is a scam, and that all people are doing is just paying money to insurance companies—and that's about it. So that seems to be the belief. So, I suppose the question is to you, who runs an insurance company: is insurance a scam? And from your experience, where do you think this belief comes from in the eyes of the public?

DH: Insurance is not a scam, but I share the views that you mentioned about the public going down the path where they think that they're just paying, paying, paying, and getting nothing out. There are two reasons for that. The first one is that, as you may be aware, insurance is not bought.

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It is sold.

It's like when you go to Pick n Pay to buy what you want. The general way that people come to buy insurance is that somebody approaches them and explains that they need it. In most cases, they never let us know what they need, but they just say, “Oh, well, maybe it's a good idea—let me buy.”

So, most people actually don't even know that they need insurance. Yes, they don't get to understand it.

And I think that is where the industry must do more—to really establish what we call the insurable interest of a person and the need for that insurable interest to be covered.

So that's the first problem. The second problem is that once you sign up and you're paying your premiums and nothing is happening, there's usually no further relationship between the insured and the insurer. They don't communicate until there's a problem.

When the problem comes, they ask you to bring all these forms, and then refer to the small print that you never read. And yet, when the need arises, the person is most vulnerable and needs better care and treatment. If they are asked too many questions, they just see that these guys are now trying to avoid paying.

AH: So, it's a scam! I mean, that's fascinating. That seems to imply, one, is there a lack of salespeople—or insurance salespeople—explaining the contract properly to their clients? I mean, because you talk about small print, and I know none of us… they always say, “If you want an African not to know something, give him a book,” because we don't read. What is the issue there?

DH: There are two things. The first one is that the products that are sold to people must answer their needs. They must be explained in a similar way—why are you taking insurance cover? What are you covering? What will happen when the insured event occurs? That's for the insurance companies to do. They are the ones who design the products.

AH: Then the agent or the salesperson’s training is crucial.

DH: Yes, it's critical. Salespersons are driven by commission. The first thing to know is that they just want you to sign so that they can get their commission. So, it is incumbent upon the insurance providers to ensure the right selection of agents, the right training of agents, and the right ethics among agents. And the incentives they give should not solely depend on the volume of business brought in.

AH: It must also depend on the quality of service that’s given to the insured and the feedback. So, in a way, if we can get salespeople to be fully educated about their products—what they’re selling—and to explain properly to consumers, we may start at least moving down the road of re-establishing some form of trust.

DH: Yes, but even before that, the insurance companies that design the products—the actuaries, the underwriters—must actually design products that respond to the needs that people have.

AH: Yes. Yeah, because I mean, I have had insurance salespeople come up to me and try to sell me a product, and I go, “But I don't want that. I don't need that. I don't have a building,” or, you know—so why are you coming?

DH: I'm of the view that a lot more research must be done by insurance companies and product developers. They must engage communities and the public, and establish what people actually need.

AH: Okay, let's go with that idea. Give me just a few words to explain exactly what insurance actually is.

DH: I think it may not be too easy, but I'll try to give it a shot. As you walk through the journey of life, there are difficult moments, and there are good moments too.

But what does a person need in their journey? They need a smooth experience through the ups and downs. It may be about illness.

It may be about death. It may be about your assets. You want to ensure that when a loss happens, or an event disturbs the smooth flow of life, you are covered—you don't have to resort to your own pocket again.

AH: I want to talk about the types of insurance cover that we have in Zimbabwe, because it actually confuses me. Because I think the numbers—you know the numbers better—but I think it's over 85% or so are burial policies.

DH: Zimbabweans are happy to pay premiums to get buried. But if you look at life products, it's probably under 1% of the total. Out of 100%, about 1% is life products.

AH: So that sort of implies that Zimbabweans prefer to have a nice send-off, but they're not as willing to provide for their families or relatives if they pass away, or to have a pension. And I can't understand that. Maybe take us through the types of insurance products that are out there.

DH: I know we've got short-term, long-term, and so forth. But just to agree with you, at the moment, the most prevalent insurance product is the funeral policy. It is the most prevalent. I'll go into some detail as to why, but that's a fact that cannot be denied.

Starting with the types of insurance products we have, we put them into three broad categories. There's general insurance, which deals with property and liability—your house, your fixed assets—if there's a fire or something.

The most common types are fire and theft, but it goes far beyond that: engineering, loss of business, and so on.

That's general insurance. Then there is health insurance, which is basically medical aid—covering what happens when you fall sick, see a doctor, need medicine, or even something like triple heart surgery. That's health insurance.

Then there's long-term insurance, which was the mainstay until the last two decades.

Long-term insurance deals with the lives of people. Before the dominance of funeral insurance, people were more concerned about what they would leave for their loved ones. There's a combination of life cover—in other words, when you pass away, unfortunately.

AH: What happens if you die prematurely? You have not saved enough money for your loved ones to continue living the life they were living when you were alive.

DH: So, you would say: yes, I'm working, I've got a house, I've got school fees to pay. If I should die, my family must receive enough money to continue living—so they miss me, but can still maintain their lifestyle.

AH: Of course. People were buying whole life policies, endowment assurances, and all that. Yes, I personally had many of those.

DH: Those policies had a long-term nature—30 years, 25 years, 15 years. That was the mainstay of life insurance. Then there was the reality of retirement. When you retire and are no longer working, you and your spouse still need income.

The children are presumably grown up, so you don’t need to provide for them anymore—unless they continue staying at home, which is not typically the case in a normal setup.

So, you then need retirement income. That’s where income savings come in. Now, it's not a risk business—

AH: It's now saving. You are setting aside money through your insurance policy, and the insurance companies are investing it for you.

DH: It's a retirement annuity. When you reach 65—which was traditionally the retirement age—you get one-third of the accumulated sum as a lump sum. You might pay off your house or go on a trip to the Caribbean to enjoy yourself after working so hard.

The balance remains as an annuity. Then the funeral component, which is the third one, was always a rider on these policies.

It was there, but not emphasized. It simply stated that if you had a whole life policy, there would be a rider called “final expenses,” which covered your funeral. So, you already had funeral cover within whole life policies.

But in those days, it wasn’t a major focus. It was just part of the policy structure. If you had group life insurance as part of employment, there would also be a rider stating that if you died, final expenses were included as part of your group life cover.