- Farming insurance revenue declined 25.5% to US$6.7 million during the first half of 2026
- The industry's agricultural portfolio contributed 4.1% of revenue, against motor insurance's 50.5%
- Zimbabwe's 2024 drought triggered US$31.8 million in insurance payouts across three African Risk Capacity arrangements
Harare- Zimbabwe's conventional farming insurance industry recorded a 25.5% decline in revenue during the first half of 2026, raising concerns about the agricultural sector's financial preparedness ahead of a rainfall season threatened by El Niño conditions. According to the Insurance and Pensions Commission's (IPEC) report for the half-year ended 30 June 2026, farming insurance revenue declined to approximately US$6.7 million from US$9 million in the comparable period of 2025, while total direct short-term insurance revenue increased by 18.2% to US$164.94 million. The contraction comes as forecasts point to below-normal rainfall across significant parts of Zimbabwe during the 2026/27 agricultural season, increasing the potential financial exposure of farmers, agricultural lenders and businesses dependent on domestic crop production.
IPEC specifically identified the decline as a concern given the anticipated El Niño conditions, which could increase weather-related losses during the forthcoming season. The regulator had expected heightened climate risks to stimulate demand for index-based agricultural insurance, although the industry's first-half revenue figures show a reduction in conventional farming insurance activity. The decline cannot independently establish that fewer farmers or hectares were insured, since insurance revenue is influenced by policy pricing, coverage periods, insured values and product composition. It nevertheless demonstrates weaker revenue generation in a market expected to provide financial protection against agricultural losses.
Farming contributed only 4.1% of direct short-term insurance revenue during the reporting period, compared with 50.5% for motor insurance and approximately 16% for fire insurance. Motor generated US$83.3 million, while fire insurance contributed US$26.3 million, giving the two categories a combined market share of approximately 66%. IPEC identified the concentration as evidence of limited diversification across the industry, with agricultural insurance remaining comparatively small despite the economic importance of farming.
The exposure extends beyond crop producers. Agricultural losses affect businesses supplying inputs, banks financing production, contractors providing machinery and processors dependent on reliable crop deliveries. Drought and other weather shocks can weaken farmers' ability to service loans, finance subsequent planting seasons and maintain livestock herds, transmitting production losses through the wider agricultural value chain.
Insurance can reduce the financial consequences of covered losses by providing compensation that supports loan repayment, asset replacement and the resumption of production. The effectiveness of such protection depends on the risks covered, sums insured, claims settlement arrangements and affordability of premiums. Zimbabwe's limited agricultural insurance revenue indicates that the market has considerable scope for development, although assessing the actual protection gap requires information on insured farmers, hectares, livestock and the value of agricultural assets covered.
The Famine Early Warning Systems Network (FEWS NET), in its September 2026 Zimbabwe food security outlook, warned that El Niño conditions were likely to produce an erratic beginning to the November to March rainfall season, below-average rainfall and above-average temperatures through at least January 2027. The network identified heightened food insecurity risks across deficit-producing areas of Matabeleland, Masvingo, Manicaland and Midlands, where poor households are particularly exposed to reduced agricultural income and elevated food prices.
The forecast also identified pressure on livestock production. Citing estimates from Zimbabwe's Ministry of Agriculture, FEWS NET reported approximately 2.23 million cattle at risk during the lean season, with supplementary feeding requirements estimated at 405,000 tonnes against a deficit of approximately 233,000 tonnes. Reduced pasture regeneration and declining water availability could place additional pressure on livestock owners, particularly in semi-arid areas.
Government approved a six-pillar El Niño mitigation plan in September 2026 covering strategic grain reserves, commodity imports, crop and livestock production, agricultural financing and early-warning coordination. The measures seek to strengthen preparedness before production losses materialise, with insurance offering a potential mechanism for financing part of the resulting economic damage.
The commercial challenge for insurers involves the concentration of agricultural risk. A widespread drought can affect thousands of insured farmers simultaneously, generating substantial claims across geographically connected production areas. Insurers therefore require appropriate pricing, reliable weather information, reinsurance protection and sufficient capital to support agricultural underwriting.
The financial consequences of the previous major El Niño event provide a measurable reference. In July 2024, the African Risk Capacity Group announced combined drought insurance payouts of approximately US$31.8 million under three arrangements covering Zimbabwe following the severe 2023/24 drought.
The Government of Zimbabwe received US$16.8 million under its sovereign insurance policy, while the World Food Programme received approximately US$6.1 million and the Start Network secured US$8.9 million through separate ARC Replica arrangements. According to African Risk Capacity, its Africa RiskView monitoring system estimated that more than 4.7 million people had been affected by the drought.
The government allocation was intended to support approximately 508,435 vulnerable households across 27 districts, complementing humanitarian interventions financed through the replica arrangements. The payments demonstrated the capacity of prearranged disaster insurance to release financing after predefined drought conditions had been met.
The combined US$31.8 million payout was approximately 4.7 times the US$6.7 million in revenue generated by conventional farming insurers during the first half of 2026. The figures represent different measures and periods, with the 2024 payment arising from sovereign and humanitarian insurance arrangements and the 2026 figure representing commercial insurance revenue.
The comparison nevertheless illustrates the scale of financing required during a severe agricultural shock. Sovereign insurance supports disaster response through government and humanitarian institutions, while commercial agricultural insurance can compensate individual farmers and businesses under their respective contracts. Expanding the latter would provide an additional source of financial recovery at producer level.
Dedicated microinsurance industry recorded stronger agricultural revenue growth during the first half of 2026, although the value remained modest. According to IPEC, farming insurance revenue among the nine operational dedicated microinsurers increased by 96% to approximately US$45,000 from US$23,000 in the comparable period.
Total dedicated microinsurance revenue increased by 6% to US$5.89 million, with legal aid insurance accounting for approximately US$3.89 million, equivalent to two-thirds of the market. Farming contributed less than 1%, illustrating the limited commercial scale of agricultural protection within the dedicated microinsurance segment.
Smallholder insurance programmes are providing examples of how agricultural coverage can reach underserved producers. In July 2026, Insurance Council of Zimbabwe vice-president and AFC Insurance managing director Cuthbert Masukume reported that more than 1,700 farmers in Buhera had enrolled in the Farmers Basket Agricultural Insurance Scheme for the 2026/27 season, compared with approximately 20 during the previous season.
The programme, introduced following the 2023/24 drought and implemented through AFC Insurance under the Agropool Scheme, operates across several districts. Masukume also reported that participating farmers had qualified for payouts amounting to approximately 20% of sums insured following the relevant insurance trigger.
The initiative demonstrates the potential of collective distribution arrangements to extend agricultural insurance to smallholders while reducing some of the administrative expenses associated with individual policies. Its broader commercial sustainability requires consistent participation, affordable premiums and reliable claims settlement across successive agricultural seasons.
Traditional agricultural insurance often requires direct assessment of damaged crops or livestock, creating substantial administration costs where farms are small and geographically dispersed. Index-based products use predefined measures, including rainfall, soil moisture or vegetation conditions, to determine compensation when specified thresholds are reached.
The structure can reduce the need for individual loss assessments and accelerate claims settlement, particularly where reliable monitoring infrastructure is available. Its effectiveness depends on the relationship between the chosen index and actual losses experienced by insured farmers.
A farmer can suffer substantial damage without receiving compensation if conditions at the reference weather station or satellite measurement do not satisfy the policy's trigger. This basis risk can weaken confidence in index insurance, making the quality of weather data, geographic coverage and policy disclosures important to long-term adoption.
India provides a relevant international comparison through its Pradhan Mantri Fasal Bima Yojana crop insurance programme. According to India's Ministry of Agriculture and Farmers Welfare in August 2026, the programme had insured more than 924.6 million farmer applications since its introduction in 2016 and paid claims exceeding ₹2.06 trillion.
The programme combines subsidised premiums, agricultural monitoring systems and digital administration to extend insurance protection across a large farming population. India's 2026/27 Union Budget allocated ₹12,200 crore to the programme, demonstrating the substantial public financing involved in sustaining coverage.
Zimbabwe operates under different fiscal and agricultural conditions, limiting the direct transferability of India's model. The relevance lies in coordinating insurance products with credible agricultural data, farmer financing arrangements and mechanisms capable of delivering claims payments efficiently.
Agricultural insurance outlook
The outlook for Zimbabwe's agricultural insurance market during the 2026/27 season is increasingly influenced by rainfall uncertainty, access to agricultural credit and the availability of affordable risk protection. The decline in conventional farming insurance revenue during the first half of 2026 places greater emphasis on expanding coverage before weather-related losses affect producers.
IPEC's reporting could strengthen the assessment of agricultural protection through regular disclosure of insured farmers, hectares and livestock, the value of insured production, claims settled and the proportion of business written under index-based products. These indicators would establish the industry's actual reach and financial effectiveness more accurately than insurance revenue alone.
The growth of smallholder schemes and the experience of sovereign drought insurance provide practical foundations for wider agricultural risk financing. Greater integration between insurers, agricultural lenders, government programmes and farmer organisations could support product distribution and improve access to reliable weather information.
Zimbabwe's experience during the 2023/24 drought demonstrated the financial demands created by widespread agricultural losses. With farming accounting for only 4.1% of conventional short-term insurance revenue at June 2026, expanding producer-level protection remains an important opportunity for insurers seeking to diversify their business while strengthening the agricultural sector's capacity to recover from weather shocks.
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