Funeral Assurance firms US$ business records 518% growth

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By Alois Vinga

ZIMBABWE’s funeral assurance sector recorded a 518% growth in US$ business and registered significant local currency business, the Insurance and Pensions Commission (IPEC) has revealed.

The insurance regulator’s latest Funeral Assurance Sector Report for the year 2022 released Friday reveals that during the year, the sector made significant strides in writing US$ business.

“In terms of forex business, the sector wrote Gross Premium of US$494,929.23 and ZAR285, 873, 69 for the year. In US terms GPW increased by 518.09% from just US$80,074.58 recorded in 2021 while ZAR GPW increased by 375, 77% from ZAR60, 086.37 recorded in 2021.”

Apart from strong regulation which has spurred confidence in the funeral assurance sector, the latest trends are consistent with the economic dynamics which have seen the ratio of US$ to ZW$ transactions reaching 70:30.

It also coincides with the Reserve Bank of Zimbabwe (RBZ) announcement made by the Monetary Policy Committee explaining that the increasing usage of the US$ in the economy is largely driven by surging US$ in flows which hit US$1,78 billion between January and March 15 2023.

In local currency terms, the funeral assurance sector also recorded significant growth with nominal Gross Premium of ZW$5,44 billion signifying  an increase of 307,35% from ZW$1,33 billion reported for the year ended 31 December 2021.

“For the year under review, new business contributed 2.66% of GPW and the remaining 97.34% was from recurring business. The contribution of new business to the sector’s GPW increased by 22.02% from 2.18% in 2021 to 2.66% in 2022,” read the IPEC report.

Besides new business, the increase in GPW was also on account of recurring premium increases as funeral assurers sought to align both the premiums and policyholder benefits in response to the volatile and dynamic macroeconomic environment.

For the year ended 31 December 2022, the number of registered and operating funeral assurers stood at eight.

“During the period, seven (7) out of the eight (8) funeral assurers were compliant with the regulatory Minimum Capital Requirement (MCR) of ZW$62.50 million as required by Statutory Instrument 59 of 2020,” added IPEC.