In rural Zimbabwe, communal farmers would prepare their land in June and July, ahead of time, waiting for the first rains in October. Most of the people could even predict the dates and the rains would come as planned.
However, in the past decade or so, the coming of the rains has become unpredictable, sometimes only starting towards Christmas time. Farmers are not alone; underwriters are affected too. The weather no longer behaves the way Zimbabwe’s insurance industry expects it to.
Agriculture remains a cornerstone of Zimbabwe’s economy, supporting livelihoods for millions of people and contributing significantly to food security and export earnings. Yet it is also among the sectors most vulnerable to climate shocks.
The World Bank Group index forum insurance say 70% of the population relies on agriculture for employment and therefore this sector is crucial to the nation’s economic stability. Addressing these climate challenges is essential for safeguarding livelihoods and boosting agricultural resilience. According to the forum, one promising solution is agricultural insurance.
For decades, agricultural underwriters relied on historical patterns to price risk. Droughts occurred periodically, and floods were relatively predictable.
“Actuarial models were built around the assumption that the past offered a reliable guide to the future. Today, that assumption is rapidly eroding,” said Primrose Mazango of Mazango Actuarial Consultancy.
Across Zimbabwe, climate change is transforming agriculture from one of the insurance sector’s most promising markets into one of its most difficult underwriting challenges. Successive droughts, erratic rainfall and shifting growing seasons are exposing weaknesses in traditional agricultural insurance models and forcing insurers to reconsider how they assess, price and transfer risk.
According to the Short-Term insurance sector report for the Quarter ended 31 March 2026, agricultural insurance contribution to revenue decreased by 25% compared to the same period in the previous year.
The Insurance and Pensions Commission (IPEC) attributes the decline in farming insurance to unpredictable weather patterns linked to climate variability, which have increased uncertainty for both insurers and policyholders.
“Overall, these segments struggled during this period, highlighting the need for new strategies and better risk management to adapt to economic and climate challenges,” said IPEC.
The regulator noted that the underperformance of these business segments highlights the need for new business strategies and stronger risk management frameworks to help insurers adapt to changing economic conditions and climate-related risks.
On short-term reinsurers’ performance and earnings, the report shows that farming insurance is among lines of business that reported negative insurance service results, attributable to higher insurance service expenses relative to insurance revenue, and higher expenses from retrocession contracts.
“This indicates a need to review premium adequacy for the motor and farming lines of business, as well as retention limits with retrocession,” said IPEC.
The report also shows that short-term reinsurers faced profitability challenges. Several short-term insurance business lines recorded significant declines in the first quarter of 2026, reflecting mounting economic and climate-related challenges facing Zimbabwe’s insurance sector.
A drought that changed the conversation
The 2023–24 El Niño drought was a stark reminder of the scale of the threat. Zimbabwe experienced widespread crop failures after poor rainfall affected much of the country. The government declared the drought a national disaster in April 2024, citing extensive agricultural losses and rising food insecurity. More than 80% of the country received below-normal rainfall, while millions of people faced hunger as crops withered in the fields.
According to the United Nations office in Geneva, approximately 7.6 million Zimbabweans required assistance as drought conditions deepened across the country. The crisis affected food production, water availability, livestock, education and public health.
For insurers, the drought represented a warning that extreme weather events are becoming less exceptional and more structural.
“The challenge is not simply that losses are increasing,” says Talent Makoho, an underwriter with ProTek Insurance Agency. “The challenge is that the assumptions underpinning our pricing models are becoming less reliable.”
That concern is increasingly shared across global insurance markets as climate change alters traditional risk patterns. Traditional agricultural insurance in Zimbabwe has generally focused on indemnity-based products. Farmers insure crops, livestock or assets, and claims are assessed after losses occur.
While this approach works well under stable climatic conditions, it becomes more complicated when weather-related losses occur simultaneously across vast geographic areas. The result, according to Makoho, is a growing recognition that conventional methods alone may no longer be sufficient.
As weather risks become more severe, farmers are increasingly recognising insurance as a necessity rather than an optional financial product. Banks and agricultural lenders are also paying closer attention to risk transfer mechanisms as they seek to protect agricultural investments.
However, smallholder farmers, the majority of Zimbabwe’s agricultural producers, are often the least able to afford rising insurance costs. Low penetration rates remain a major challenge despite growing awareness of climate risks.
“If premiums rise too quickly, farmers stop buying cover,” said Mazango. “But if insurers underprice climate risks, they expose themselves to unsustainable losses.”
Re-thinking underwriting models
Among a number of responses, index-based insurance is gaining traction. Unlike traditional indemnity insurance, index insurance pays out when a predefined trigger is reached, such as rainfall levels falling below a specified threshold. Rather than assessing individual losses on each farm, insurers rely on objective weather data.
The model offers several advantages, including the processing of claims more quickly. Index-based products may be more scalable for large populations of smallholder farmers.
Zimbabwe has already experimented with innovative climate-risk financing mechanisms. The country’s participation in the African Risk Capacity (ARC) sovereign insurance programme provides an example of how insurance can support resilience against drought-related shocks.
Following the 2023/24 drought, Zimbabwe received significant payouts amounting to US$16.8 million through ARC mechanisms designed to provide rapid financing during climate disasters. The programme was triggered after severe crop failures affected millions of people.
Although sovereign insurance differs from commercial agricultural insurance, the principle is similar; using data-driven triggers to provide faster financial support when climate shocks occur. Many industry stakeholders believe similar approaches could become increasingly important at farm level.
Technology enters the underwriting process
Climate variability is also accelerating the adoption of new technologies in underwriting. Advances in satellite monitoring, remote sensing, artificial intelligence and predictive analytics are enabling insurers to assess agricultural risk with greater precision than ever before.
Researchers in Zimbabwe have already begun exploring machine-learning models designed specifically for agricultural insurance underwriting. One recent study proposed an automated actuarial framework capable of integrating climate scenarios, crop characteristics and farm-level risk factors to improve underwriting decisions.
Brighton Mahohoho, a researcher at the department of Mathematics and Computational Sciences, University of Zimbabwe, said the proposed model uses Extreme Machine Learning (XML) approaches, including deep neural networks, ensemble methods and reinforcement learning, to automate and improve the efficiency of the agricultural insurance underwriting process.
“By harnessing vast amounts of heterogeneous data, including historical weather patterns, soil quality indicators, crop yield data, market trends, and socio-economic factors, the model generates comprehensive risk profiles for individual farmers or agricultural operations.”
Mahohoho said the system’s advanced algorithms identify complex patterns and relationships within the data, enabling insurers to assess risk more accurately and make underwriting decisions in real time.
Weather data can be integrated directly into pricing models. Predictive analytics can help insurers identify emerging risks before losses occur. The models represent a significant departure from traditional approaches that rely heavily on historical averages.
From compensation to resilience
Traditionally, insurance has been viewed primarily as a mechanism for compensating losses after disasters occur. Increasingly, however, insurers are being asked to contribute to resilience before disasters happen.
This means moving beyond claims payments toward risk reduction. In Zimbabwe, that transition is already under way.
Some insurers are exploring incentives for climate-smart agriculture, conservation farming, drought-resistant crops and improved irrigation systems. Others are partnering with agricultural extension services, technology providers and development organisations.
In 2024, an initiative by IPEC, the Agro Insurance Pool, was established under the Insurance Council of Zimbabwe’s Special Risks Consortium (SRIC), with plans for a pilot project designed for the 2023/24 rainy season. The 2023/24 season was significantly affected by the El Niño phenomenon, and AFC Insurance Company was appointed as the lead insurer for the Goromonzi pilot project.
The project aimed to cover approximately 4,000 farmers with a total sum insured of roughly US$1.2 million. However, due to various factors, only 1,800 farmers ultimately signed up and paid the required premiums. The insurance product was a hybrid model, combining weather index insurance with area yield index insurance to provide comprehensive protection against a range of perils, including drought, excessive rain, pests and diseases.
“If insurers only pay claims after disasters, they are treating symptoms,” said Mazango. “The real opportunity lies in helping reduce vulnerability before losses occur.”
The International Finance Corporation (IFC), in collaboration with IPEC, undertook a comprehensive diagnostic to explore the potential of agricultural insurance. This initiative involved engaging key market stakeholders and surveying over 1,600 smallholder farmers across various value chains, including cotton, groundnuts, maize, soybean and sunflowers.
Findings from the study show a high interest in insurance, with approximately 90% of surveyed smallholder farmers expressing interest in agricultural index insurance. Leveraging Climate-Smart Technologies, IFC noted Zimbabwe has significant potential to adopt emerging climate-smart agriculture technologies.
“Combining these technologies with well-designed insurance products can foster a climate-resilient agricultural sector, creating new business opportunities and mitigating the impacts of climate-related challenges,” said IFC in a statement.
Lessons from Zambia
In neighbouring Zambia, insurers are demonstrating how climate risk insurance can help cushion farmers against increasingly unpredictable weather.
Professional Insurance Corporation Zambia Limited (PICZ), working with government and development partners, recently compensated smallholder farmers affected by adverse weather during the 2025/2026 farming season under its Climate Risk Insurance programme.
Speaking at a payout ceremony in Lundazi District, PICZ agriculture business manager, Silenga Wamunyima, said climate risk insurance extends beyond financial compensation by strengthening farmers’ resilience, promoting financial inclusion and supporting sustainable agricultural production.
“Climate risk insurance is more than financial protection; it is a catalyst for resilience, financial inclusion and sustainable agricultural development,” Wamunyima said.
He added that the company’s Grain for Premium insurance model enables smallholder farmers to invest confidently in improved farming practices, knowing they are protected against weather-related risks beyond their control.
The initiative is being implemented under the SNV Youth Employment and Entrepreneurship (YEE) Programme in partnership with ZEP-RE and other insurance providers, and is helping thousands of smallholder farmers build resilience to the increasing impacts of climate change.
Climate scientists warn that Southern Africa is likely to experience increasing weather variability in coming decades. Droughts, floods and temperature extremes are expected to become more frequent and severe. Demand for agricultural insurance is likely to grow.
COMMENTS