The Sunday Mail
Tawanda Musarurwa
Notwithstanding the immeasurable negative social and economic impacts of Covid-19, local insurers appear to have walked away from the worst of the pandemic almost completely unscathed.
Except, of course, in cases where some corporate policyholders have sought legal recourse.
Data on insurance claims in the local market highlights gaps in pandemic protection, despite Zimbabwe declaring Covid-19 a national disaster in March 2020.
According to Insurance Council of Zimbabwe (ICZ) chief executive officer, Mr Tendai Karonga, local insurers did not record any significant increase in claims over the first six months of the year.
“As at 30 June 2021, the technical performance of the sector was good, with the technical result for both the short-term insurers and reinsurers above 20 percent.
“The technical result or net premium ratio was 39,68 percent and 21,12 percent for the short-term insurers and reinsurers, respectively,” he said.
“This indicates that claims were overall under control during the review period suggesting that the pandemic had minimal effect directly or indirectly to the technical performance of the short-term book.
“It has to be noted that during this period, insurance policies in the short-term sector did not cover loss of profits as a result of the Covid-19 pandemic.”
How can a pandemic that has adversely affected most spheres of life have a “minimal effect” on businesses whose purpose it is to provide cover against loss, damage and liabilities?
At the global level, the Organisation for Economic Co-operation and Development (OECD) has estimated that one month of strict confinement measures leads to approximately US$1,7 trillion in revenue losses.
To put things into perspective, within those six months Zimbabwe experienced its second and third wave of Covid-19 infections, which were both accompanied by lockdowns that had an impact on businesses and the welfare of households.
The above points to a significant coverage gap.
On the other hand, because funeral assurers have always covered deaths, these entities saw an increase in claims over the period under review.
“There was a general increase in the number of deaths from Covid-19 particularly during the third wave,” said Zimbabwe Association of Funeral Assurers (ZAFA) general manager Mr Taka Svosve.
“This led to a notable increase in funeral assurance claims during the same period.”
Short-term insurers need to come up with policies that factor in health pandemics such as Covid-19 to their business interruption cover policies.
One of the main reasons why Covid-19 had “minimal effect” on local short-term insurers’ claims is that current business interruption cover is limited.
However, this problem is not exclusive to local insurers.
In neighbouring South Africa, the Financial Sector Conduct Authority (FSCA) has since classified the types of business interruption policies that could include Covid-19 coverage, while some non-life insurers have agreed to provide interim payments to policyholders with a potentially relevant coverage for infectious diseases, while work on legal clarity continues.
Beyond business interruption cover, insurers may also consider extending such coverage to informal sector players and the generality of the population who endure the most of the pandemic.
However, experts say such a scheme should start at Government level.
Said World Bank financial sector specialist Mr Crispen Mawadza:
“Mainstreaming disaster risk management into any development planning could offer some safety nets to the victims of disasters.
“Once you have the instruments to reduce the impact, or at least to finance the losses, you are likely to build a more inclusive society, with about 31 percent reduction in the average loss.”
