The decline of tradition and the urgency of innovation in life insurance

HARARE – The life insurance industry in Zimbabwe is undergoing a profound transformation, one that is as much a reflection of the deteriorating macroeconomic environment as it is a wake-up call for the sector to re-imagine its purpose. For decades, life insurance products—endowments, whole life, term assurance—stood as pillars of financial planning, offering a safety net and long-term security. But today, those traditional lines are crumbling under the weight of inflation, currency instability, and a general erosion of trust.

What has emerged in their place is a patchwork of short-term, high-churn insurance products—primarily funeral and group life assurance—designed less to build wealth or stability, and more to offer quick, transactional risk cover. This pivot away from traditional models might seem pragmatic on the surface, but it also reveals something more troubling: that the life insurance sector, once built on long horizons and generational thinking, is now gripped by survival mode.

The end of “Life” in life insurance

According to the Insurance and Pensions Commission (IPEC), Zimbabwe’s life assurance industry in 2024 was dominated by two products: funeral assurance (70.82%) and group life assurance (15.93%), which together accounted for a staggering 86.75% of total revenue. In contrast, classic long-term policies—endowments, whole life, and term assurance—combined for less than 14%.

This decline is not merely a shift in consumer preference. It is a systemic failure. In an environment where the value of the local currency can halve in a matter of months, and household disposable incomes are under constant siege, long-term commitments are increasingly untenable. The IPEC report further notes that 93% of revenue came from recurring business, with new business contributing only 7%, suggesting that the industry is stagnating rather than expanding.

What’s more, many of the products being sold, particularly funeral and group life policies, are annually renewable—an actuarial euphemism for short-term cover that can be terminated or repriced at any moment. This erodes the very idea of life insurance as a dependable, long-term contract.

The broader macroeconomic environment tells the same story. Zimbabwe’s exchange rate volatility in 2024 led to a 10% decline in total assets held by life assurers, with asset values falling from US$580 million to US$521 million. At the same time, 65% of all insurance revenue came from foreign currency policies, a clear signal that trust in local currency-denominated products is evaporating.

Nominal profits appear healthy—US$196 million before tax—but closer inspection reveals that over a quarter of this came from unrealized fair value gains, not actual underwriting performance. This kind of “profit” is illusory in an economy where market volatility can wipe out paper gains overnight.

It is no wonder that consumer confidence is at historic lows. In Q4 2024 alone, over 23,000 life insurance policies were “Not Taken Up”, representing nearly US$10 million in foregone premiums. This statistic is emblematic of a public that has grown weary of empty promises, opaque policy structures, and products that fail to deliver real value in moments of need.

Zimbabwe is not alone. The 2025 McKinsey Global Insurance Report paints a similar picture across the world’s mature and emerging insurance markets. Term life and endowment policies are either stagnant or shrinking. In the United States, life insurance penetration has dropped to less than 50% of the population, and the number of in-force policies has fallen by 13% since 2011.

Why? Because life is changing. Fewer people are marrying. Fertility rates are falling. Families are dual-income, mobile, and digitally native. They want flexibility, transparency, and instant access. Traditional insurance—rigid, actuarially driven, paper-heavy—is increasingly irrelevant to how people live and think about risk.

Even in regions with strong social safety nets, a growing retirement savings gap (estimated at US$106 trillion globally) is opening new frontiers for insurance—but not through the old channels. Instead, growth is coming from integrated wealth and health platforms, digital-first solutions, and private equity-backed insurers that blur the line between insurance and asset management.

Zimbabwe’s Moment of Reckoning

The danger in Zimbabwe is that we are not just lagging behind the global shift—we are ignoring it altogether.
Instead of innovating, the sector has retrenched into low-value, high-frequency products. Instead of addressing lapses in trust, we’re counting the number of funeral policies sold. Instead of building long-term financial resilience for the aging population, we’re handing out one-year covers with little actuarial relevance. This is not life insurance. It is risk arbitrage—short-term gains with long-term consequences.

Moreover, the industry’s high concentration—the top five insurers control over 84% of market share—makes it structurally resistant to change. Competition is limited. Innovation is optional. And regulators are playing catch-up, issuing directives that are too often ignored or poorly enforced.

What Must Change

It is time for radical transformation. If the Zimbabwean life insurance industry is to regain its footing, it must undergo a profound shift in mindset, product development, and operational delivery. This will require:
Redefining Product Relevance
We must move beyond funeral policies. Products need to address real financial needs—retirement income, education savings, health protection—and be flexible enough to evolve with a policyholder’s life.
Embedding Digital Trust
Like banks and fintechs, insurers must invest in intuitive digital platforms. Mobile-first onboarding, policy tracking, and claims processing should be standard—not aspirational.
Currency-Agnostic Solutions
To hedge against inflation and restore confidence, products must be structured to hold value across currencies. Dual-currency policies, offshore-linked portfolios, and inflation-indexed annuities are not luxuries—they are necessities.
Human-Centered Design
The next generation of products must be rooted in empathy and simplicity. The actuarial lens must be balanced with the human one.

In a country where economic chaos has become the norm, life insurance should be a refuge, a contract of dignity between the present and the future. But instead, it has become a casualty of crisis, a relic of a system too rigid to bend.

The industry has a choice: evolve or dissolve. Zimbabwe does not need more funeral policies. It needs a future worth insuring.-finx