Govt’s agric insurance to benefit millions of farmers

FINANCE and Economic Development Minister Professor Mthuli Ncube says the agricultural index insurance which seeks to improve insurance cover to the farming community will be launched later this year.

The development of the agricultural index insurance in the country commenced early this year.

Presenting the mid-term budget review last week, Prof Ncube said agriculture was one of Zimbabwe’s major economic centrepieces but the sector had insurance cover for the sector remained “very” low.

“Despite the numerous risks and shocks affecting performance of the sector, insurance cover for agricultural activities has remained very low with insurance premiums at less than 3 percent of the total gross premiums generated by the insurance industry.

“In this regard, development of agricultural index insurance in the country which commenced in early 2022 is expected to be launched during the third quarter of 2022,” he said.

Agriculture is central to Zimbabwe’s economy, but it is a risky endeavour that is becoming riskier as weather patterns become less predictable.

The Zimbabwe project will draw on the experience of the Global Index Insurance Facility (GIIF) that has supported the growth of agriculture/climate insurance markets in Cameroon, Cote d’Ivoire, Mozambique, Nigeria, Senegal, Zambia, and elsewhere.

Prof Ncube also noted that the persistent low level of compliance with the prescribed assets threshold by the insurance and pension industry remains a cause of concern.

Going forward, Prof Ncube said the industry will need to invest in bankable projects that can be accorded prescribed asset status or subscribe to Government paper in order to comply with the law.

He said the initiative will lead to the development of a regulatory framework for agricultural index insurance, setting up of 43 knowledge exchange forums, as well as developing capacity in agriculture index insurance including innovative insurance solutions for smallholder farmers.

Meanwhile, Prof Ncube highlighted that compensation for insurance and pensions loss due to currency reform was presently underway.

He said as at June 29, 2022, pension pay outs of US$100 per person had been disbursed to over 2 059 pensioners, translating to US$205 950.

Updating on the Insurance and Pensions Bills, Prof Ncube said the Pensions and Provident Funds Bill was passed by the Senate on April 7, 2022 and now awaits Presidential assent, while the Insurance and Pensions Commission Bill and the Insurance Bill are at the second reading stage in the National Assembly.

He said the enactment of the above legislation will address deficiencies in the existing regulatory framework and empower the Insurance and Pension Commission to effectively deliver its mandate.

Prof Ncube said in order to promote long term savings in the insurance and pensions sector, the Government will continue to review the maximum allowable deduction for pension contributions in order to align the allowable deduction to market developments.

As at March 31, 2022, the insurance industry recorded 94 percent growth in premium income of $14,9 billion from $7,7 billion recorded over the corresponding period last year.

The insurance industry assets and liabilities stood at $176 billion and $79 billion, respectively as at the end of March this year.

In terms of the pension industry, the number of registered occupational pension funds during the period under review stood at 985, a marginal increase compared to 974 funds reported as at March 31, 2021.

The industry’s membership including beneficiaries slightly increased by 2,1 percent to 954 395 as at the end of the first quarter this year from 935 053 reported during the corresponding quarter in 2021.

The sector’s asset base grew by 175,6 percent in the first quarter this year to reach $488,1 billion compared to $177,12 billion recorded over the same period in 2021.

The increase in the asset base was mainly driven by quoted equities and investment properties, which had a combined share of 84 percent of the industry’s total assets.-The Herald