The Insurance and Pensions Commission (Ipec) last Friday launched a micro-insurance regulatory framework that facilitates provision of insurance to low income earners. In a speech read on his behalf at the launch, Finance and Economic Development Minister Patrick Chinamasa said micro-insurance services had an important role to play in the economy.
"The development of the micro-insurance industry in Zimbabwe is a welcome move given the highly informalised nature of our economy," he said.
"Micro-insurance forms an important aspect of financial inclusion given that it extends a range of financial products to adult individuals and households in particular to those at the bottom of the pyramid."
Minister Chinamasa said it was also important to uphold good corporate governance in the micro-insurance sector to boost public confidence and create value for policy shareholders.
Ipec commissioner, Tendai Karonga told the same gathering that a steering committee had been appointed to spearhead implementation of micro-insurance in the country.
The committee is led by a high-ranking official from the Ministry of Finance and comprises members from the Reserve Bank of Zimbabwe, Securities and Exchange Commission of Zimbabwe, Insurance Council of Zimbabwe, Zimbabwe Association of Micro-finance Institutions and the academia.
He said micro-insurance products will include weather index, funeral assurance, health insurance, agricultural insurance and credit life.
"Distribution channels for micro-insurance will be micro-finance institutions, mobile network operators, church organisations and burial societies," he said.
Mr Karonga said the new innovation was informed by the national financial inclusion strategy, and is targeting previously marginalized groups such as small to medium entrepreneurs, peasant farmers, vendors and other low income earners.
"As noted in the results of a Finscope survey done in 2014, at least 70 percent of adults in the country were not insured. Of the 30 percent with insurance, 77 percent were in respect of funeral insurance. This means there is a huge gap on the insurance uptake which needs to be filled," he said.
He added: "In essence, micro-insurance is a growth area, which will increase penetration ratio from the current 3,6 percent as more members of society can access and afford insurance products that match their needs."
At the core of the framework is accessibility and affordability of insurance to low income consumers to reduce their vulnerability and to protect their income streams while at the same time improving social stability and broad-based economic development.