Zimbabwe’s life insurance industry is undergoing a quiet but significant transformation. Products once designed to span decades, including whole-life covers and retirement-linked policies, are increasingly being replaced by renewable annual contracts.
Insurers say the shift to annual policies reflects the economic reality in a country marked by inflation shocks and currency instability. Regulators and consumer advocates, however, warn that the trend may be eroding the core purpose of life insurance and exposing policyholders to new risks.
Zimbabwe’s life insurance market is beginning to resemble short-term risk cover, raising questions about solvency, consumer protection and whether existing regulations are fit for purpose.
The Insurance and Pensions Commission (IPEC) industry report for the third quarter ended September 2025 shows direct life insurers made insurance revenue of US$172.05 million using the standard official exchange rate. This reflects a 39% change from the $123.77 million recorded in the same period of 2024. Foreign currency-denominated revenue accounted for 55% of total insurance income, down 7% from the previous period’s 62%. This was attributed to exchange rate stability.
Economic upheaval
Life insurance traditionally operates on long scopes. Policyholders commit to paying premiums over many years, while insurers invest those funds in long-dated assets to meet future obligations. However, in Zimbabwe, this model has been repeatedly undermined by economic upheaval.
Over the past two decades, hyperinflation, multiple currency reforms and abrupt policy shifts have wiped out savings and distorted balance sheets. Long-term policies denominated in local currency were rendered nearly worthless during the hyperinflation era of the late 2000s.
More recently, renewed inflationary pressures and exchange-rate volatility have made it difficult for insurers to price and guarantee benefits far into the future. This has resulted in many insurers turning to annual renewable life policies—contracts that must be reviewed and re-priced each year. These products limit insurers’ long-term exposure and allow premiums and benefits to be adjusted in line with inflation or currency movements.
Tadiwanashe Maone, a lecturer in risk management at Zimbabwe Open University, said that from a risk-management perspective, annual renewables make sense.
“Committing to a 20- or 30-year promise in an unstable monetary environment is extremely difficult.”
Funeral assurance and group life assurance continued to be the primary sources of income for the life insurance sector, together accounting for 82% of the total revenue.
Implications of annual life covers
The regulator, Zimbabwe’s IPEC, which oversees the sector, has grown increasingly concerned about the implications of this shift. While annual renewable policies are not illegal, regulators worry that their growing dominance may undermine policyholder protection and long-term financial planning.
Life insurance regulation in Zimbabwe, as in most jurisdictions, is built around the assumption that insurers hold long-term liabilities matched by long-term assets. Capital adequacy rules, reserving requirements and actuarial valuations, are designed with that structure in mind.
“When the market moves towards short-term contracts, the regulatory framework starts to creak,” said Anesu Chaibva, a businessman and a member of a consumer rights lobby group. “You risk a mismatch between the intent of life insurance regulation and the reality of the products being sold.”
One concern is policy continuity. Annual renewable contracts allow insurers to decline renewal, re-price aggressively or change terms, potentially leaving policyholders uninsured at older ages or when health risks increase. That stands in contrast to traditional life policies, where premiums and coverage are contractually locked in.
“There is a danger that life insurance becomes indistinguishable from yearly risk cover,” said Chaibva. “That defeats the social protection role the industry is supposed to play.”
Mixed bag for consumers
Consumers are looking at the shift with mixed reactions. On one hand, annual renewable policies often have lower initial premiums, making them more affordable in a low-income, cash-strapped economy. On the other, they offer less certainty.
Zimbabwe’s economic history has left many citizens deeply sceptical of long-term financial products. Pension funds and life policies were among the biggest casualties of hyperinflation, eroding public trust that has yet to fully recover.
“People remember paying into policies for years and getting nothing meaningful at the end,” said Maone. “Annual policies feel safer because you’re not locking yourself in.”
However, concerned stakeholders are worried that as policyholders age or develop medical conditions, premiums can rise sharply, or coverage may not be renewed at all. Without strong disclosure and consumer education, buyers may not fully understand those risks.
“The short-term, renewable nature of these policies [like funeral assurance] prioritises immediate revenue but might not offer sufficient long-term security or value, conflicting with core insurance principles. Again, the industry’s heavy focus on funeral and group life products leads to a lack of diversification, making the sector vulnerable and less responsive to other needs,” said Chaibva.
IPEC has flagged concerns about how these products are marketed, particularly to lower-income customers who may assume they are buying long-term protection.
Zimbabwe’s financial markets offer limited long-dated instruments, forcing insurers to rely heavily on short-term assets or property investments. Currency volatility further complicates matters, especially for policies denominated in local currency.
Innovation amid shift
Some insurers have attempted hybrid solutions, offering policies denominated in US dollars or linked to inflation indices. But such products are often unaffordable for most Zimbabweans and raise equity concerns in a country where access to hard currency is uneven.
The shift towards annual renewables sets Zimbabwe apart from many other African markets, where life insurance penetration remains low but long-term products still dominate. In countries such as Kenya, South Africa and Botswana, relatively stable currencies and deeper capital markets allow insurers to offer multi-decade covers with greater confidence.
In Zimbabwe, life insurance is a cornerstone of household financial resilience, providing protection against death, disability and old age. Its decline as a long-term instrument could deepen vulnerability in a country where social safety nets are limited.
Regulatory concerns
IPEC is concerned about adherence to the funeral directive designed to protect policyholders, especially as renewable policies dominate, potentially weakening the directive’s impact.
The regulator said the share of revenue generated from funeral assurance and group life assurance is steadily rising, affecting the market share of traditional life assurance products.
IPEC said a notable trend in the life insurance industry is the shift from traditional long-term products towards predominantly renewable annual policies.
“This change is especially clear in funeral assurance and group life assurance policies currently available. This practice raises regulatory concerns about its compliance with the Funeral Directive’s objectives, particularly regarding the level of policyholder protection. As a result, the industry is strongly encouraged to strictly follow the rules set out in the Funeral Directive,” said IPEC.
Nyaradzo Life Assurance Company holds the leading position in the life assurance sector with a 39.27% market share, largely driven by its predominant revenue from funeral assurance policies.
The total revenue of the top five companies in the sector reached ZWG3.85 billion, equivalent to US$144.33 million. These five leading life insurers account for 84% of the sector’s total revenue, underscoring significant revenue concentration among the major market participants.
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