Insurance: an importance investment

Lazarus Sauti

 

PATIENCE Nyabango runs an informal business in Goromonzi, a peri-urban place near Harare, the capital city of Zimbabwe.

 

She sells second-hand clothes and cosmetics to residents around Majuru Growth Point, a thriving economic centre in Goromonzi.

 

Like many informal workers (domestic and home-based workers, cross-border traders, small-holder farmers and street vendors) in Goromonzi, Mbare market, Sakubva market, Murambinda Growth Point and other parts of the country, Nyabango faces different risks associated with her business yet she does not have insurance cover.

 

She risks losing her wares to fire and robbery among other unfortunate eventualities, but her negative perceptions towards insurance are a hindrance towards taking up an insurance product that covers her.

 

“Insurance is not an investment but an unnecessary expense,” Nyabango said. “In fact, insurance ndeye vanhu vane zvinhu zvavo (insurance is for the elites) and if you check vakadzi vazhinji itsuro dzemubhuku (most women are poor). Because of this, insurance companies target men as they are mostly in the formal sector.”

 

That insurance is a necessary financial protection tool appears not to concern Nyabango.

 

Her sentiments that insurance is an unnecessary expense, and insurance companies target men than women are also echoed by many people in Zimbabwe.

 

“As women, we don’t have access to insurance. After all, why should we bother? We have already started self-help safety nets like ‘mikando’ or ‘kufusha mari’ to cushion us in times of need,” said Ropafadzo Chitiga, a vendor at Mupadzanhamo market in Mbare.

 

A 2017 situational analysis of women in the informal economy in Zimbabwe by the International Labour Organisation (ILO) also revealed that women traders in Zimbabwe lack financial support and they often resort to self-help safety nets or selling assets to pay for other expenses or cover health-care costs, hurting their ability to develop or recover from setbacks.

 

To complicate their lives, Nyabango, Chitiga and other women in Zimbabwe own fewer assets because of harmful cultural practices, inheritance laws, restrictions on land ownership, and divorce practices, which favour men.

 

The low uptake of insurance by Nyabango, Chitiga and other women in the informal economy is not only a Zimbabwean problem; worldwide, the uptake of insurance by both men and women is also low.

 

“About 73 percent of the world population remains uncovered by adequate insurance schemes,” agreed ILO.

 

Speaking at a virtual launch of the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) Insurance and Pensions Journalism Mentorship Program 2020, IPEC Commissioner, Grace Muradzikwa said a recent baseline survey carried out by her organisation revealed that only 34 percent of the population in Zimbabwe has insurance of some sort.

 

“There is a low uptake of insurance products in Zimbabwe. A recent baseline survey revealed that only 34 percent of the population in the country have insurance of some sort, 76 percent of which are in respect of funeral insurance policies,” she said.

 

Muradzikwa further said liquidity challenges, insurance fraud, low confidence owing to loss of value because of hyper-inflationary legacy issues, and high levels of premium debtors are inhibiting the growth of the insurance sector in the country.

 

Because of these and other challenges, only a few people are taking up insurance policies, a fact which the ILO concurred with, adding that these few people are men in the formal sector in most low-income countries like Zimbabwe.

 

Most Zimbabweans in the informal sector are, therefore, being left out although the sector is large and continues to grow with most citizens working in it because of the contraction of the formal sector.

 

A 2016 study by the Confederation of Zimbabwe Industries (CZI) – the umbrella body of the manufacturing industry in the country – revealed that at least 2.7 million Zimbabweans were making their living in the informal sector.

 

Another working paper, ‘Shadow Economies around the World: What Did We Learn Over the Last 20 Years?’ by the International Monetary Fund (IMF) also showed that over 60 percent of the Zimbabwean economy is informal, second only to Bolivia’s 62.3 percent.

 

As for the African Development Bank (AfDB), nine in 10 rural and urban workers have informal jobs in Africa and most employees are women and youth.

 

“The prominence of the informal sector in most African economies stems from the opportunities it offers to the most vulnerable populations such as the poorest, women and youth,” added AfDB.

 

Women’s rights activist, Daphne Jena said women are not only highly represented in the lowest paid and most vulnerable forms of informal work, but they are excluded from insurance and social protection programmes.

 

“Women in the informal economy, therefore, need insurance and social security because of high risks of asset loss, over and above exposure to road accidents, especially for cross boarder traders,” she said.

 

Since women have started self-help safety nets, added Jena, there is also a need to build on such initiatives, which are local and community-driven to ensure that they become more sustainable.

 

“Stakeholders must promote the micro-insurance and area-based schemes, and this will be essential in the short-run to guarantee inclusive coverage for both men and women in the informal economy,” she said.

 

Jena also urged actors in the insurance industry to put a special emphasis on the accessibility of insurance and social protection to women with disabilities.

 

“This will ensure that they are not abused by their able-bodied counterparts,” she added.

 

Sanctuary Insurance Company Marketing Officer, Kudzai Muza said his organisation does not have specific products for informal traders, but it has ensured that its entire range of traditionally bespoke products can be customised to suit the risk requirements of informal traders.

 

“This we have done through a tailored product range in classes such as motor insurance to ensure that informal traders can benefit from concessions such as reduced fleet rates,” he said.

 

Muza added: “We are also not blind to the reality that informal traders are a marginalised sector, especially regarding access to financial services such as insurance, a scenario mostly borne out of diminished penetration rates. As such, our focus and target has always been to ensure a viable risk solution that does not overburden the informal traders’ pockets.”

 

He also said women have always been an essential target for Sanctuary Insurance.

 

“This is solidified by the fact that women traditionally have better risk profiles than men. As a result, we have built in provisions within our policies for women that have a track record of healthy risk profiles who are eligible for concessions on renewals of their policies,” he added.

 

“We have also taken an active role and have partnered reputable institutions in initiatives that ensure demystification of women’s roles in all spectrums of society but primarily with a focus on insurance and sport.”

 

Insurance Council of Zimbabwe (ICZ) Marketing and Public Relations Officer, Ringisai Batiya said the short-term insurance sector in Zimbabwe has micro-insurance products targeted at the informal sector.

 

“Insurers tailor-make policies to suit the informal traders’ requirements in the event that micro-insurance products available do not suit identified needs,” she told insure263.co.zw.

 

Muradzikwa concurred, adding that insurance companies have specific packages related to gender risks, for example maternity insurance and cover targeting women in Small and Medium Enterprises (SMEs) and small-holder farmers.

 

“Agriculture insurance for crops and livestock also brings stability in crop and livestock production by protecting commercial and small-scale farmers from the vagaries of the weather,” she added.

 

Muradzikwa continued: “IPEC approved Prescribed Asset (PA) status – an investment in projects of national importance – towards agriculture financing worth Z$250m this year.

 

“This approval is consistent with the government’s thrust to increase production and productivity in the agricultural sector.”

 

IPEC Director of Pensions, Cuthbert Munjoma also said insurance packages in Zimbabwe are not segregated.

 

“Insurance companies target both men and women,” he said. “Through health insurance and medical aid schemes, for instance, both men and women in the formal and informal sectors are protected from high cost of medication, accident injuries, and disability.”

 

NSSA Acting General Manager, Arthur Manase added that through social protection, his organisation is offering safety net to vulnerable households not to fall into poverty.

 

Thanks to the National Social Protection Policy, launched in December 2016, NSSA is making sure workers in the informal economy are also covered.

 

Manase, however, said most citizens in both rural and urban areas are failing to access NSSA benefits due to ignorance of the products and package benefits that they can get from the institution.

 

“We are, therefore, building a new NSSA anchored on honesty, accountability and transparency – key pillars of good corporate governance and this new NSSA is setting up offices in remote areas to enhance access to information on NSSA services and to bring services closer to beneficiaries,” he said. “This will help in providing schemes that correspond to the needs of all members of the Zimbabwean society.”

 

Moves by IPEC and NSSA of extending insurance schemes and social protection services to both men and women in Zimbabwe should be commended because they help to deflate the delusions about insurance and pensions where women like Nyabango and Chitiga think insurance and pensions are just unnecessary expenses.