EVERY registered funeral assurer in Zimbabwe is now paying out on policies capped at a maximum sum insured of US$6 000 – according to the industry regulator – but the burden to prove it rests with policyholders.
Responding to written questions, the Insurance and Pensions Commission (IPEC) confirmed that the US$6 000 ceiling imposed on funeral policies in 2023 is now being observed across the board.
“The cap of US$6 000 applies to all risks arising within the jurisdiction of Zimbabwe and all registered funeral underwriters are expected to comply.
“All registered funeral underwriters are compliant,” said Mrs Sibongile Siwela, IPEC’s director of insurance supervision.
Policies exceeding US$6 000, or the local-currency equivalent, are deemed fully paid-up at that threshold.
According to IPEC, a local funeral policy can have a maximum sum assured of US$6 000 (or the ZiG equivalent at the prevailing interbank rate) for each insured person; that is, the most a policy can be set up to cover per person.
In a family policy, that limit applies to every member, so a policy covering four or five people can, in principle, carry the maximum sum assured for each one.
The actual sum assured depends on what the policyholder chooses to cover, such as a coffin or casket, hearse, bus, tent and toilets, so it differs from one policyholder to another.
An industry insider, who spoke anonymously, said on average a funeral policy covering casket, hearse and bus has an average sum assured of US$2 500 per person.
Policies issued outside Zimbabwe have higher limits: US$10 000 within the region and US$25 000 internationally.
Asked how policyholders can confirm their own cover complies, Mrs Siwela said the onus falls on clients themselves.
“Policyholders are encouraged to check their policy documents to satisfy themselves that their sum assured does not exceed US$6 000 or equivalent,” she said.
Policyholders can also query their insurer or the Commission directly, she added.
The industry’s own representative body has echoed that call for consumers to do their own homework. “Policies differ. And don’t assume that what I’ve maybe googled on AI applies to my policy, or what I’ve heard someone saying applies to my policy.
“So, every policy needs to be specific around every policy and its categories. Understand the policy that we have joined first,” said Mr Gilbert Mwanza, who represented the Zimbabwe Association of Funeral Assurers (ZAFA) during the latest IPEC Forum programme.
A review of promotional material from three of the biggest players suggests policyholders have little to go on.
Circular 28 of 2024 requires insurers to offer annually renewable and long-term products alike. “For new policies, all funeral underwriters are to always make available both options to policyholders,” wrote IPEC Commissioner Dr Grace Muradzikwa.
The circular also says the US$6 000 cap applies only to local policies, with US$10 000 allowed for regional policies and US$25 000 for international ones. IPEC also requires insurers to honour multiple policies in full.
The commission did not say whether it independently audits individual policy files to verify the cap, or whether its compliance finding rests on insurer self-reporting.
IPEC’s own half-year Life Assurance Sector Report, covering the six months to June 30, shows funeral business driving the industry’s growth – and claims complaints rising in tandem. Funeral and group life assurance made up 83 percent of the sector’s US$147,04 million in insurance revenue for the half-year, up 34 percent from a year earlier, the report shows. Funeral cover alone accounted for 72 percent of revenue.
Three insurers – Nyaradzo Life, Doves Life and Old Mutual Life – control 72 percent of the market between them.
Nyaradzo holds 41 percent, built almost entirely on funeral policies.
IPEC received 106 complaints during the half-year. About 60 of those (or 63 percent) involved unpaid benefits or claim repudiation, the report says, calling it “a growing worrisome trend” that “points to poor claims settlement ratios for the life companies.”
A further 23 percent concerned disputed premium deductions.
Two insurers accounted for 65 percent of all complaints: Fidelity Life, with 42, and Doves, with 27. The sector posted a combined ratio of 56 percent for the half-year, with claims consuming 28 percent of revenue and expenses another 28 percent.
Pre-tax profit rose 128 percent to US$78,54 million, lifted by a 43 percent unrealised gain on quoted equities amid rallies on the Zimbabwe Stock Exchange and the Victoria Falls Stock Exchange.
The industry’s compliance with prescribed-asset rules remains weak. Insurers must hold 15 percent of assets in government-designated instruments; the sector average was 8 percent, unchanged from the March quarter.
Only three of 11 direct insurers – Nhaka Life, CBZ Life and Fidelity Life – met the threshold.
Life reinsurers, by contrast, averaged 32 percent compliance, IPEC said.
Policy lapses climbed to 14,56 percent of lapsable policies, up from 13,6 percent a year earlier. ZB Life recorded the highest lapse ratio, at 26,35 percent, followed by Econet Life at 20,97 percent.
IPEC said the treatment of lapsing savings policies is now receiving supervisory attention “from a market conduct perspective.”
Not-taken-up policies – cover abandoned shortly after signing – cost the sector ZiG5,36 million in lost revenue during the quarter, down from ZiG7,7 million at the start of the period, as the number of such policies fell to 28 722 from 39 496.
IPEC deregistered Heritage Life Insurance in April over governance and capital breaches, cutting the number of direct life insurers to 11 from 12. The regulator said it would subject insurers with lapse ratios above 10 percent to “targeted market conduct reviews” to ensure fair treatment of policyholders, transparent fee structures and clear policy term disclosures.
Market concentration remains high.
The Herfindahl-Hirschman Index for the sector stood at 2,283, a level the regulator says confirms “a few dominant firms control a large share of the market, resulting in limited competition.”
Foreign-currency business accounted for 57 percent of total insurance revenue, up from 54 percent a year earlier, driven largely by new policies. The regulator has directed insurers to match foreign-currency premiums with foreign-currency-denominated assets under Statutory Instrument 280 of 2020.
The life reinsurance segment, comprising five companies, posted smaller but faster-growing numbers: revenue of US$6,66 million, up 51 percent, and pre-tax profit of US$3,37 million, up 110 percent. Emeritus Reinsurance leads that market with a 47 percent revenue share.
IPEC’s Q2 report flags currency mismatches, low prescribed-asset holdings and elevated lapse rates as the sector’s key structural risks going forward.-herald
