• Short-term insurance complaints increased by 118% to 144 during HY2026, with delayed claims settlement accounting for 117 cases, or 81%
• Incurred claims increased by 58% to US$71.13 million against 18.2% insurance revenue growth, pushing the claims ratio from 37% to 53%
• Ten of Zimbabwe's 21 direct short-term insurers reported negative working capital, while active policies declined to 811,302 despite 513,006 new policies written

Harare - Zimbabwe's short-term insurance industry has recorded a 118% increase in regulatory complaints during the first half of 2026, with delayed claims settlement accounting for four in every five cases, as incurred claims rose more than three times as fast as insurance revenue.

Policyholders lodged 144 complaints with the Insurance and Pensions Commission (IPEC), compared with 66 a year earlier, while incurred claims increased by 58% to US$71.13 million against revenue growth of 18.2% to US$164.94 million. The regulator also reported that 10 of the country's 21 direct short-term insurers had negative working capital and current ratios below one, exposing liquidity constraints in an industry increasingly dependent on foreign currency premiums.

Revenue increased by approximately US$25.41 million from US$139.53 million in the first half of 2025, led by motor and fire insurance. Incurred claims rose from US$44.94 million to US$71.13 million, pushing IPEC's reported claims ratio from 37% to 53%. The increase places greater pressure on underwriting margins, although improved expense management helped absorb part of the deterioration.

The industry's expense ratio declined from 60% to 45%, contributing to a marginal improvement in the combined ratio from 99% to 98%. Insurance service results increased by 42%, demonstrating that higher claims experience did not translate into a corresponding deterioration in aggregate underwriting profitability. The figures nevertheless conceal differences between individual insurers, with five companies reporting losses both before and after tax.

Policy numbers show considerable turnover beneath the revenue growth. Insurers wrote 513,006 new policies during the half-year and recorded 539,796 exits, leaving 811,302 policies in force at the end of June against 838,092 in December 2025. Exits were equivalent to 64.4% of the opening policy book, while new policies represented 61.2%, all within six months.

These movements require careful interpretation because short-term insurance products have different contract durations. Policies that expire after a short coverage period may be replaced through subsequent purchases, while non-renewals and cancellations can reflect affordability, customer preferences or changes in risk exposure.

IPEC's aggregate figures do not identify the reasons behind the exits. A breakdown separating scheduled expiries, voluntary non-renewals, cancellations for non-payment and insurer-initiated cancellations would establish how much of the turnover results from normal contract cycles and how much represents lost customer relationships.

For insurers, the composition influences acquisition and administration costs. Short-duration contracts can require frequent renewal activity, while customers exiting permanently reduce opportunities to recover distribution expenses through future premiums.

The industry's financial sustainability therefore depends partly on the cost of obtaining new business, policy persistency and the proportion of premium revenue retained after claims and operating expenses.

Motor insurance generated US$83.3 million, accounting for 50.5% of direct short-term insurance revenue, while fire insurance contributed US$26.3 million. Together, the two categories represented approximately two-thirds of the market.

IPEC identified the concentration as evidence of limited diversification across the sector. Insurance Commissioner Grace Muradzikwa has urged providers to develop products addressing the needs of inadequately insured individuals and businesses, pointing to opportunities beyond established motor and property coverage.

Motor insurance exposes underwriters to the cost of imported spare parts, vehicle valuations, repair services and accident-related claims. Fire insurance carries exposure to property replacement costs, including imported construction materials and equipment.

The prevalence of foreign currency-denominated business makes matching premiums, assets and claims obligations particularly important. Short-term insurers and dedicated microinsurers reported combined insurance revenue equivalent to US$170.83 million, of which approximately 80% was foreign currency business.

The composition provides greater alignment with foreign currency claims obligations, although insurers still require adequate liquid assets and effective claims reserves to meet payments as they fall due.

IPEC reported that liquid assets among direct short-term insurers declined by approximately 2% to US$185.17 million, from US$188.58 million at the previous reporting date.

The regulator identified a 26% reduction in other receivables, a 6% decline in reinsurance contract assets and a 3% decline in insurance contract assets among factors affecting liquid asset balances.

More significantly, 10 of the 21 direct insurers reported negative working capital and current ratios below one. These companies had current liabilities exceeding current assets under the reported accounting classifications, creating potential pressure on their ability to settle short-term obligations.

IPEC explicitly associated the industry's liquidity difficulties with operational problems, including delayed claims settlement. The regulator identified slow-moving receivables, outstanding reinsurance recoveries and potential mismatches between asset liquidity and claims obligations among the areas requiring supervisory attention.

Negative working capital does not establish that an insurer is insolvent, particularly given the characteristics of insurance liabilities and the structure of investment portfolios. It does identify a potential funding constraint requiring examination alongside cash flows, asset quality and the timing of claims payments.

The regulator has indicated that supervision will concentrate on insurers with persistent negative working capital and repeated delays in claims settlement. It also plans to review liquidity ratios and the ageing of reinsurance recoverables, alongside the adequacy of protection against large insured losses.

IPEC resolved 128 of the 144 complaints received during the first half, representing approximately 89%, and carried the remaining 16 into the third quarter.

Of the total, 139 complaints were lodged against direct short-term insurers, four against insurance brokers and one against the Insurance Council of Zimbabwe.

Delayed settlement accounted for 117 complaints, representing approximately 81%. Unsatisfactory service contributed 10%, repudiation or non-payment accounted for 8%, and complaints related to tobacco and wheat represented approximately 1%.

These figures cover complaints escalated to the regulator and exclude disputes resolved internally by insurance companies. They therefore cannot establish the proportion of claims paid late across the entire industry.

However, the increase in complaints relative to the industry's reported growth provides grounds for closer scrutiny. Complaints rose from approximately 4.7 per US$10 million in insurance revenue during HY2025 to 8.7 during HY2026, based on direct short-term insurer revenue.

IPEC's insurer-level analysis provides further evidence of uneven complaint experience. Eleven insurance companies recorded complaint shares exceeding their respective shares of industry revenue.

Champions Insurance accounted for approximately 22% of complaints against a 2% share of reported revenue, while Econet Insurance accounted for approximately 9% of complaints against a 5% revenue share.

The regulator's complaint ratio measures the relationship between an insurer's share of complaints and its revenue market share. It does not measure complaints per policy or establish the percentage of claims incorrectly handled.

The concentration nevertheless identifies where additional scrutiny of complaints, settlement procedures and financial capacity may be warranted.

First Mutual Holdings reported a 6% increase in consolidated insurance contract revenue to US$92.8 million for the six months ended June 2026, while its insurance service result declined by 7% to US$13.1 million.

Management attributed the decline to increased claims experience and higher insurance contract acquisition costs. The results cover the group's wider insurance operations, including businesses outside Zimbabwe, and therefore cannot be directly compared with the domestic short-term industry alone.

NicozDiamond Insurance provides a more relevant company-level comparison. First Mutual's Zimbabwean short-term insurance subsidiary reported an 11% increase in insurance contract revenue to US$21.5 million, supported by new business in marine, accident and motor insurance.

Its revenue growth was below the industry's 18.2% increase, although differences in business composition and accounting presentation need to be considered when comparing company and sector results.

NicozDiamond's profit after tax increased by 271% to US$5.1 million, supported substantially by fair value gains on investment property.

The company's performance illustrates the influence of investment valuations on insurance profitability. Property revaluations can increase accounting earnings and reported equity without generating an equivalent immediate cash inflow.

At group level, First Mutual's investment property fair value gains rose to US$13.8 million, while net investment returns increased to US$13.7 million. These amounts relate to the consolidated group and should be distinguished from NicozDiamond's individual financial performance.

The difference between investment gains and operating cash generation is particularly relevant for insurers carrying obligations requiring timely settlement. Liquidity must be assessed through available cash, collectable premiums, investment realisations and reinsurance recoveries alongside reported profits.

IPEC's complaints data show that NicozDiamond accounted for approximately 12% of reported short-term insurance complaints against a 14% share of industry insurance revenue. These proportions provide a more balanced picture of its complaint experience than the absolute number of complaints alone.

How other markets measure policyholder outcomes

South Africa's National Financial Ombud Scheme secured R442.9 million in financial recoveries for consumers during 2025, including approximately R82.9 million relating to non-life insurance disputes.

The scheme publishes information on cases opened and closed, financial recoveries and complaint handling performance. Its disclosures allow the financial outcomes of consumer redress to be assessed alongside the volume of complaints.

Germany provides another regulatory reference. Financial supervisor BaFin reported handling 8,439 insurance-related complaints during 2024, with motor insurance accounting for the largest number by product category. Its published complaints statistics support scrutiny of insurers' conduct across different lines of business.

Kenya's Insurance Regulatory Authority also publishes quarterly claims and complaints information, including statistics on outstanding claims, settlements and complaints received against individual insurers.

These approaches provide useful references for strengthening Zimbabwe's reporting. IPEC already publishes complaint counts and insurer-level complaint ratios, but additional disclosure would improve the ability of consumers to compare insurers on service quality and claims performance.

Useful indicators include median claims settlement periods, the proportion of claims settled outside contractual timelines, complaints per 10,000 active policies, reasons for policy exits and the amounts recovered through regulatory intervention.

Such information would give policyholders a stronger basis for assessing insurance products beyond premiums, distribution arrangements and advertised benefits.

Policyholders awaiting settlement can request written confirmation of their claim's status, outstanding documentation and the expected settlement date. Copies of policy schedules, premium receipts, submitted claims documents and correspondence provide important evidence when disputes arise.

Where an insurer delays settlement without adequate explanation or disputes a claim, the policyholder can request written reasons based on the contract and escalate an unresolved complaint to IPEC.

The regulator's resolution of approximately 89% of complaints received during HY2026 demonstrates that formal intervention provides an available avenue for resolving disputes. The reported resolution rate does not establish that every complaint was settled in the policyholder's favour or resulted in a financial payment.

The outlook for Zimbabwe's short-term insurance industry through the remainder of 2026 and into 2027 remains supported by demand for motor, property and other commercial risk protection, although claims experience and liquidity management will exert greater influence on underwriting performance.

The 58% increase in incurred claims, compared with 18.2% revenue growth, raises the importance of pricing adequacy, claims reserving and reinsurance arrangements. Improvements in the expense ratio supported industry underwriting profitability during the first half, giving insurers a stronger cost base from which to absorb claims pressure.

However, negative working capital among nearly half of direct insurers and the concentration of complaints around delayed settlement require sustained regulatory attention.

IPEC's subsequent reporting will provide further evidence through changes in claims experience, working capital positions, complaints distribution and policyholder retention. Improved liquidity and more reliable settlement procedures would strengthen the industry's capacity to convert its expanding revenue base into effective financial protection.

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