THE country’s insurance sector is gradually moving towards full dollarisation, with industry participants writing business worth about US$300 million last year, data from the Insurance and Pension Commission (Ipec) reveal.
Gross premium written (GPW) — the total amount an insurer writes during a specific period before deductions for expenses such as ceding and commissions — in foreign currency for short-term insures increased by 42% to US$143,85 million.
The major sources of foreign currency-denominated business for short-term insurers were motor and fire, contributing a combined 51% of the total business written for the period under review.
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.
Latest statistics availed by the Zimbabwe National Statistics Agency show that the economy is fast dollarising with 78% of transactions for food purchases now being done in foreign currency.
The financial industry in Zimbabwe, according to central bank governor John Mangudya, 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.
The total foreign currency denominated business written by short-term reinsurers increased by 50% to US$122,10 million during the comparative period in 2021.
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“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 Ipec report read in part.
In terms of foreign currency-denominated GPW, WAICA Re, Zep Re and Grand Re were the market leaders.
These reinsurers controlled 50% of the market during the year under review.
In the micro-insurance sector, the total GPW amounted to US$247 429,84 for the year under review, showing a significant increase from US$735,01 reported for the same comparable period in 2021.
The significant increase shows improved uptake of micro-insurance.
For the forex business, the funeral assurance sector recorded gross premium amounting to US$494 929,23 and R285 873,69.
The United States dollar denominated GPW increased by 518,09% from US$80 074,58 recorded in 2021 while the South African rand GPW increased by 375,77% from R60 086,37.
The life assurance sector reported foreign currency business amounting to US$23,2 million while funeral assurance business was the major contributor with one entity writing 50% of the business.
Life reassurance sector reported foreign currency business amounting to US$2,5 million.
Reinsurance brokers reported US$35 million in gross premium receivable for the period. The market leader in terms of foreign currency premiums was Minerva Re, followed by Bright Re.
Insurance brokers recorded a total of US$66 million gross premium income in foreign currency denominated business for the period under review.