Insurers across Africa are writing more business but facing tougher questions about how much risk they should retain, even as reinsurance earnings come under pressure.
In Zimbabwe, the trend is already visible, with strong growth in motor and fire portfolios not translating into higher returns from reinsurance. Instead, cedants are earning less from their treaties even as catastrophe exposures, capital requirements and pricing pressures intensify.
According to the Insurance and Pensions Commission’s (IPEC) first-quarter 2026 report, net income from reinsurance contracts fell 22% to US$6.51 million from US$8.31 million a year earlier despite continued expansion in underwriting portfolios.
The development mirrors a broader shift in many African reinsurance markets where tighter terms, higher retrocession costs and IFRS 17 reporting dynamics are reshaping outcomes.
IPEC did not attribute Zimbabwe’s scenario to a single factor. Instead, this was pointed to several possible reasons.
“This may reflect tighter treaty terms, higher costs of retrocession, adverse experience on ceded portfolios, changes in risk retention, or timing effects under IFRS 17 measurement,” said IPEC.
The figures have prompted the industry to ask if the Zimbabwean insurers are retaining the right amount of risk in an increasingly complex global reinsurance market.
Cedants reassessments
But Zimbabwe is not alone. Across international reinsurance markets, cedants are reassessing how much risk they retain after several years of hardening treaty conditions, rising catastrophe losses and higher capital costs.
An insurance accounting expert and consulting actuary at Mazango Actuarial Consultancy, Tichaona Gwarada said global reinsurers have become increasingly disciplined in their approach to pricing and capital allocation.
“This reflects heightened concerns over climate-related losses, inflation and catastrophe exposure. At the same time, the adoption of IFRS 17 has fundamentally reshaped how insurers measure, recognise and report financial performance. This places greater emphasis on transparency, profitability and risk management,” said Gwarada.
Gwarada said on the surface, Zimbabwe’s short-term insurance market continues to perform strongly. Motor and fire insurance remain the principal growth drivers, reflecting expanding asset values, vehicle ownership and commercial property exposure.
“But concentration in these two classes also creates accumulation risk. A single industrial fire, warehouse complex or weather-related catastrophe can produce losses that exceed historical expectations. This is common particularly where underwriting portfolios are geographically concentrated,” said Gwarada.
Amidst such developments, IPEC is urging insurers to review whether existing reinsurance treaties remain adequate. The regulator has recommended that insurers reassess treaty limits, event definitions, and reinstatement provisions.
“Given the concentration of growth in Motor and Fire, entities must reassess treaty adequacy (limits, event definitions, reinstatements) and counterparty quality, and test whether current net retentions remain consistent with risk appetite and capital buffers,” he added.
These adjustments determine how much loss an insurer absorbs before reinsurance protection begins. It also helps assess whether sufficient capacity exists should multiple large losses occur during a policy year.
Hardening market
Zimbabwe’s insurers are operating within a reinsurance environment that looks markedly different from just a few years ago. Following years of elevated catastrophe claims from natural disasters, many global reinsurers tightened underwriting standards and became more selective about the risks they accepted.
Pricing has increased across many treaty renewals while buyers have generally been required to retain larger first-loss positions and also accept narrower treaty wordings. Africa, Zimbabwe included, has not been fully insulated from those developments.
Speaking at the 29th African Reinsurance Forum in Harare last year, Zimbabwe’s Minister of Finance, Economic Development and Investment Promotion Prof Mthuli Ncube described reinsurance as “the silent engine behind confidence, entrepreneurship, and national development.” He encouraged African governments and industry leaders to build an integrated and well-capitalised reinsurance ecosystem that supports trade, infrastructure, and resilience.
“Africa retains only about 30% of its reinsurance premiums, with more than 70% externalised. This represents lost investment capital, lost jobs, and lost opportunities for local industry development. We must turn this tide by strengthening our home-grown reinsurance institutions and rethinking the role of mandatory cessions to national and regional reinsurers,” said Ncube.
Ncube highlighted the importance of aligning the reinsurance agenda with the African Continental Free Trade Area (AfCFTA), in light of intra-African investment and industrialisation.
The African Reinsurance Corporation (Africa Re), one of the continent’s largest reinsurers, reported lower first-quarter profitability in 2026 despite growth in gross written premiums. The corporation cited lower retrocession recoveries and weaker investment conditions under IFRS 17 reporting.
“Premium growth alone no longer guarantees stronger technical performance. Retaining more premium allows insurers to improve underwriting margins, provided claims remain within expectations. However, higher retentions also expose balance sheets to larger individual losses. Conversely, purchasing broader reinsurance protection reduces earnings volatility but increases ceded premium costs. Finding the optimal balance has become increasingly difficult,” said Gwarada.
Reassessing assumptions
Zimbabwe’s regulator has not suggested insurers are retaining excessive risk. Rather, IPEC argues that changing market conditions require companies to reassess whether historical assumptions remain appropriate.
“That review should extend beyond price. A programme that appears inexpensive during profitable years may prove inadequate during major loss events. Counterparty strength has become equally important,” said Richard Tawonezve, a chartered accountant and expert in IFRS 17 reporting.
“Reinsurance only performs its intended function if recoveries remain reliable when major claims occur. Boards therefore need continued assurance that their reinsurers possess sufficient financial strength and diversified capital resources.”
Tawonezve said part of the reported decline may also reflect accounting rather than deteriorating economics. Under IFRS 17, insurance revenue, reinsurance recoveries and contract profitability are recognised differently from previous reporting standards. He said timing differences, reserve movements and changes in contractual service margins can produce financial outcomes that differ from traditional premium-based analysis.
“IFRS 17 has shifted attention from simple premium growth toward capital efficiency, profitability by cohort and the overall resilience of reinsurance programmes. That evolution is visible across global markets, where insurers are investing heavily in actuarial modelling and treaty optimisation,” said Tawonezve.
According to the IPEC’s report, motor and fire portfolios which traditionally generate substantial premium income, also expose insurers to potentially correlated losses. Industry practitioners say insurers should regularly evaluate catastrophe scenarios and aggregate exposures before annual treaty renewals rather than relying solely on previous programme structures.
More than 50% of Zimbabwe’s reinsurance market premium is placed through Minerva. According to the reinsurer, one of their major services is treaty reinsurance.
“This addresses capital adequacy, retention analysis and catastrophic risk management to protect cedants balance sheets. Minerva’s dedicated treaty advisors and actuarial team craft flexible, well structured reinsurance programmes,” said the reinsurer.
Zimbabwe’s experience reflects questions confronting insurers across many African markets. Climate-related losses are becoming less predictable. Urbanisation continues increasing property concentrations and motor fleets continue expanding.
Gwarada said, a 22% decline in net income from reinsurance contracts does not, on its own, indicate deterioration in Zimbabwe’s insurance market nor does it necessarily suggest treaty failure.
“Instead, it provides an opportunity for insurers to reassess whether existing reinsurance strategies remain aligned with today’s risk environment. It is about whether current programmes remain fit for purpose amid changing catastrophe exposures, evolving accounting standards and tighter global reinsurance markets.”
As insurers review treaty adequacy under IFRS 17, another timely question is whether Zimbabwe’s highly concentrated funeral assurance market is creating distortions in reinsurance demand, capital allocation and overall market resilience.
Unique challenge for Zimbabwe
Zimbabwe’s reinsurance challenges are unfolding against the backdrop of one of Africa’s most unusual insurance markets. Funeral assurance dominates Zimbabwe’s long-term insurance business, reflecting strong consumer demand for products that provide immediate financial support at death rather than longer-term savings or protection products. But that concentration also presents structural challenges for insurers and reinsurers.
During the 2025 Q3, the regulator said the life insurance market was concentrated around a limited number of products and companies.
Funeral risks differ significantly from traditional life and property business. While many funeral assurers have historically retained most of their risks instead of purchasing reassurance, limiting opportunities for risk diversification across the broader insurance market.
The regular said, the low reinsurance ratio in the 2025 third quarter mainly stems from the dominance of in-kind funeral assurance products services instead of monetary benefits and the offering of renewable policies each year, many of which do not include reinsurance.
IPEC has previously encouraged funeral assurers to strengthen their use of reassurance as a safeguard against unexpected spikes in claims.
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