Africa-Press – Zimbabwe. INDUSTRY experts have said Zimbabwe’s booming informal sector, despite being a key driver of the economy, remains largely neglected by insurance providers, calling for tailored solutions to address the distinct requirements of the cash-rich segment.
The informal sector accounts for an estimated 64,1% of economic activity, representing about US$42 billion at GDP purchasing power parity.
Speaking during a panel discussion at the just-ended Actuarial Society of Zimbabwe’s 11th annual convention held in Nyanga, experts stressed that insurers must develop tailored solutions to address the requirements of the informal sector through innovative product design and adaptation.
Independent Actuarial Consultants senior actuarial analyst, Ruth Musandu, stressed that insurers must understand the realities of informal workers, noting that traditional insurance models, built for stable, salaried employees, failed to address the needs of those with low and unpredictable incomes.
“The informal sector encompasses a wide range of income-generating activities, which are vital to livelihoods and local economies, but they are not officially monitored or protected.
Despite them being informal, they are very significant; they are anything but insignificant because they support the majority of employment in many African economies.
The sector is a significant part of the economy, yet it is very much underserved when it comes to financial protection tools like insurance,” she said“Insurers and actuaries must reimagine product design for the informal sector, prioritising simplicity, flexibility, affordability and trust.
Products should address real pain points, accommodate limited cash flows and offer flexible premium payment options that align with income patterns.
”National Social Security Authority corporate actuary Nicholas Elias highlighted the lack of trust between the informal sector and the formal financial institutions, saying the latter did not have informal risk-sharing mechanisms in place.
He suggested that insurers could leverage these existing mechanisms to develop products that meet the needs of the informal sector.
“I think from the research and the interactions that we have also done, we have noted that this is a real issue.
The informal economy does not trust the formal economic players, and there is a need for the private sector, together with the government, to work on areas that improve this trust.
There is also the perceived cost of insurance; the informal players do feel that our premiums, or the premiums that we are charging, are too high,” Elias said.
He added that another challenge is the fear of regulation, which may stem from misinformation.
He said informal sector players often worry that engaging with insurers will lead to unwanted scrutiny of their financials and attract other regulators.
Masawara Financial Services group chief executive Tinashe Muyambo highlighted the importance of having a deeper understanding of the sector’s diverse needs and behaviours, suggesting that the industry’s current approach is inadequate.
“Insurance plays a vital role in wealth creation by supporting communities during times of loss, but the industry’s current approach is not working for the informal sector.
We should believe in the importance of serving this sector and caring enough to make it a priority, knowing about their needs and behaviours to deliver effective solutions,” he said.
As Zimbabwe seeks inclusive economic growth, the experts agreed that bridging the insurance gap for the informal sector is no longer optional but essential.
They agreed that designing flexible, accessible insurance solutions tailored to the sector’s unique challenges could unlock resilience and financial security for millions operating outside the formal economy.
For More News And Analysis About Zimbabwe Follow Africa-Press
