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Short-term insurers in Zimbabwe reported foreign currency-denominated insurance revenue amounting to US$114.55 million for the half year ended June 30, 2025 - a 29% increase from the previous year - driven mainly by strong performance in the motor and fire insurance classes.

According to the Insurance and Pensions Commission (Ipec), foreign currency business accounted for 82% of total insurance revenue during the first six months of the year, reflecting the sector's growing reliance on hard currency transactions amid continued economic volatility.

In its second-quarter report, Ipec revealed that as of June 2025, direct insurers had 513,019 active policies, an 8% rise from the end of 2024. The majority of these policies - 453,334, representing 88% of the total - were under the motor insurance line. The regulator attributed this dominance to the legal requirement for vehicle owners to obtain insurance before registering their vehicles, which continues to sustain demand in the motor segment.

"Short-term insurers reported foreign currency-denominated insurance revenue amounting to US$114.55 million for the half year ended 30 June 2025, representing a 29% increase from US$88.78 million reported in June 2024," Ipec said. "Foreign currency business accounted for 82% of total insurance revenue reported in the first half of 2025."

During the period under review, total insurance revenue stood at ZiG3.72 billion, equivalent to US$139.53 million at an average exchange rate of US$1:ZiG26.65. This marked a 30% rise from the US$106.99 million recorded in the same period in 2024.

Ipec noted that foreign currency earnings from farming insurance and public liability grew remarkably, increasing by 163% and 116%, respectively. In contrast, aviation insurance revenue declined by 42%, reflecting reduced activity in that sector.

"The primary sources of foreign currency-denominated insurance revenue for short-term insurers were the motor and fire classes," Ipec said. "The prominence of motor insurance is largely due to the mandatory nature of vehicle coverage, which ensures a steady demand from vehicle owners and the transportation sector. Fire insurance remains essential for homeowners, businesses, and industrial entities seeking protection against property loss due to fire outbreaks, natural disasters, or other unforeseen events."

Together, the motor and fire insurance classes contributed approximately 58% of total US dollar-denominated revenue.

Short-term insurers also posted a solid underwriting performance, achieving an insurance service result of ZiG395.93 million (US$14.86 million) - up 55% from US$9.60 million in the previous period. This, Ipec said, underscored the sector's ability to generate income from core insurance operations.

Insurance service expenses, however, surged to ZiG3.56 billion (US$133.58 million), marking a 77% increase from US$75.26 million recorded during the same period last year. The regulator attributed this to higher liabilities for incurred claims and losses on onerous contracts, which rose by 321% and 102%, respectively.

Other expenses not directly related to insurance contracts totalled ZiG359.59 million (US$13.49 million), slightly up from US$12.26 million reported in 2024.

Overall, Ipec said the performance of short-term insurers during the first half of 2025 demonstrated strong operational resilience and steady growth in both local and foreign currency segments, despite ongoing economic and sectoral challenges.
- newsday

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