ACCORDING to an official report for the first quarter of 2024, funeral assurance has emerged as the most prevalent insurance option for a significant majority of Zimbabweans.

While it is common for one insurance type to outshine others, the data distribution is alarming, as other insurance business lines appear substantially less viable in Zimbabwe. This calls for an exploration of the cultural, economic, and practical factors driving Zimbabweans to prioritise funeral assurance over other types of insurance. For the first three months of 2024, the Insurance and Pensions Commission (Ipec) reported that funeral assurance accounted for 66% of total life assurance revenue.

However, further disturbing data indicates that only 30% of Zimbabweans have active insurance policies, and of these, 70% are funeral policies.  In 2022, the gross written premium of the insurance market stood at ZW$253,6 billion (US$634,1 million), with a projected compound annual growth rate (CAGR), exceeding 56% between 2023 and 2027. Within this landscape, funeral assurance has emerged as a dominant force, capturing the attention of both insurers and consumers. Nyaradzo Life dominated the industry in revenue terms, holding a market share of 33%, despite relying solely on funeral policy cover. Zimnat Life followed with a 13% market share, while Doves Life and First Mutual Life each held 11%.

Fidelity Life, with the most diverse revenue streams, held only an 8% market share. Although Zimnat boasts a relatively diverse portfolio, Doves also relies on funeral policies as its primary revenue stream. The data suggests that specialisation in the insurance life business yields a more robust customer base, as companies focus on offering customer-oriented products that suit demand.

While some entrepreneurs argue that a market can be created upon product availability, it is imperative to assess the spending appetite in any economy. In this light, while more diverse companies may prospectively benefit in the uncertain long run, companies like Nyaradzo, which are more focused on highly sought-after products, will likely survive the test of time in a developing economy.

On the other hand, group life assurance (GLA) trailed behind funeral assurance in terms of revenue contribution for the aggregate industry, standing at 19% compared to funeral assurance's 66%.

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Funeral assurance focuses on individual coverage for funeral expenses, while GLA is a group-based life insurance benefit provided by employers. The substantially lower GLA contribution level aligns with the low employment rate in Zimbabwe, particularly in the formal sector where GLAs may be more common.

The skewed data towards funeral assurance and minimal participation in the insurance space by Zimbabweans can be attributed to various reasons worth examining for prospective decision-making by potential players in the market. Zimbabwean culture places immense importance on funerals. These events serve as communal gatherings, where families come together to honour the deceased, share grief, and celebrate a life well-lived. Funeral ceremonies are elaborate affairs, often spanning several days. Given this cultural context, funeral assurance becomes a natural choice for families seeking financial support during these emotionally charged times.

Furthermore, funeral assurance policies are typically more affordable than comprehensive life or health insurance. Zimbabweans, especially those from low-income backgrounds, find it easier to allocate a portion of their income toward funeral coverage.

The simplicity of funeral policies, coupled with straightforward eligibility criteria, makes them accessible to a broader segment of the population, hence garnering a wider customer base.

Prominent funeral assurance providers like Nyaradzo, Doves, and Econet have established strong reputations. Their reliability, efficient service, and empathetic approach resonate with Zimbabweans. Trust plays a pivotal role in insurance decisions, and funeral providers have successfully cultivated this trust over time, something other insurance options providers have yet to achieve.

In summary, Zimbabweans’ preference for funeral assurance reflects a blend of cultural norms, economic realities, and practical considerations.  As the insurance industry continues to evolve, understanding these dynamics will be crucial for insurers, policymakers, and consumers alike. Funeral assurance’s dominance is not merely statistical; it is deeply embedded in the fabric of Zimbabwean life.

  • Duma is a financial analyst and accountant at Equity Axis, a leading media and financial research firm in Zimbabwe. — twdumah@gmail.com or tinashed@equityaxis.com, X: TWDuma_