Direct long term capital in key economic sectors, insurers urged
STAFF WRITER
Radar Holdings Limited chief executive Elias Hwenga has urged insurance and pension funds to direct more of their long-term capital towards agriculture, manufacturing, mining and infrastructure to stimulate economic activity and expand demand for insurance products.
He highlighted that the insurers should grow the industry by investing in sectors that create demand for insurance.
Speaking at the Southern Africa Insurance Indaba in Victoria Falls on Friday, Hwenga said channelling funds into the wider economy would not only support productive activity but also open up new opportunities for insurers and institutional investors.
“These are the very sectors whose growth will expand the market of insurers itself. You create your own market by investing in these sectors,” he said.
Hwenga was speaking under the theme Capital Under Pressure: Can African Insurance Markets Stay Resilient?
He noted that capital remained available to the insurance industry, but investors were becoming more selective as concerns mounted over profitability, weak balance sheets and the sustainability of some business models.
“The honest answer is yes, but selectively. The growth potential is undeniable, but investors look beyond the headlines,” he said.
Hwenga said much of the industry’s recent profitability had come from equity gains and property revaluations rather than sound underwriting performance.
At the same time, policyholder numbers were declining.
In Zimbabwe, nine of the 20 direct insurers had negative working capital, with some companies resorting to paying claims in instalments, he said.
“Capital has not left the market, but it has become far more selective,” he added.
Hwenga said the insurers needed stronger balance sheets, profitable underwriting and sound corporate governance to attract investment.
He noted that insurers and pension funds controlled substantial resources that could be channelled into economic development, not just seeking capital.
However, their portfolios remained heavily concentrated in equities and property, limiting the flow of long-term funding into productive sectors.
Hwenga highlighted that unlocking this capital would require more bankable projects, credible sponsors and secure off-take agreements, alongside financial structures that accommodate investors’ liquidity and solvency requirements.
He argued that the main constraint was not necessarily a shortage of capital, but a lack of viable investment opportunities.
Hwenga also called for greater investment in domestic insurance capacity, saying the placement of large risks offshore drained foreign currency and deprived the local market of expertise.
“When we send most of our large risks offshore, we export foreign currency and the very expertise we should be building at home,” he added.
Hwenga said African insurers also needed to move away from pursuing premium growth at any cost, with some relying on investment income to make up for weak underwriting performance.
He called for more disciplined pricing and stronger risk management as climate-related disasters put increasing pressure on insurers’ ability to meet claims.
The industry also needed to prepare for tighter regulatory requirements, including Zimbabwe’s expected shift towards risk-based solvency standards.
Some insurers would need fresh capital, restructuring or new investment partners to meet the changing requirements, he said.
Hwenga said investing institutional funds in productive sectors, while strengthening underwriting discipline, would help build a more resilient insurance industry and support wider economic growth.
The three-day indaba, organised by the Insurance Institute of Zimbabwe, ends on Friday.