Delivered to roughly thirty Zimbabwean insurance chief executives and the Commissioner of Insurance and Pensions at the ICZ Executive Forum, Fancourt, George, on 12 August 2026.

The executive summary follows. The full paper, including sources, can be downloaded at the end of this page.

 

The argument in one paragraph

Climate change is not a future sustainability issue for Zimbabwe’s insurance industry. It is a present business issue, and it was already in the sector’s numbers two years ago under other names. The industry has proved, at small scale and with its own capital, that climate cover can be written and paid in this market. What is missing is not the machinery but the scale, and the obstacle is not the product but the distribution, the trust and the absence of any connection between the layers of protection that already exist.

1. The gap is not where we look for it

When the 2023/24 drought arrived, roughly thirty-two million US dollars of insurance money reached Zimbabwe. Almost none of it came from the domestic industry. It came through a sovereign risk pool arranged under the African Union, supported by development finance, and it protected the state so the state could feed people.

That was insurance working, in Zimbabwe, when it mattered. But it did not protect the commercial farmer, the agri-processor, or the small business with no customers because nobody had any money.

The reason is structural rather than a failure of effort. The short-term book is motor, fire and the related traditional classes. On the most recent sector numbers, motor alone is just under half of what the industry writes, and the top five lines are past eighty percent. Those lines protect the assets of an industrialised economy. They were never designed to protect a farmer against the sky.

2. It was already in your numbers

Most of what a drought does to an insurance business never appears on a claims form. It arrives through four channels, none of them labelled as climate:

Persistency. Drought destroys disposable income. Comprehensive becomes third-party. Third-party becomes nothing. Lapse rates climb, and the management meeting discusses persistency rather than weather.

Premium base. Small businesses in farming districts lose customers rather than crops. Policy counts fall because the economy that generated them contracted.

Credit quality. Where the industry stands behind lending, a failed season arrives eighteen months later as arrears, falling collateral values and weaker recoveries.

Asset values. A drought that pressures output, currency and the fiscus moves the asset side of the balance sheet while it is moving the liability side. That is a correlated exposure, and correlation is the one thing the discipline exists to avoid.

Those same four channels are how the next event will arrive.

3. What this industry has already proved

In October 2024, close to eighteen hundred smallholder farmers in Goromonzi received a payout on an index-based product following the drought. Each had paid about fifteen US dollars in premium. Each received around sixty-five. The total was roughly two hundred and thirty thousand US dollars.

The product was the Farmer’s Basket, a bundled weather-index and area-yield cover, written through the Agro Insurance Pool established under the Insurance Council of Zimbabwe’s Special Risks Consortium, with AFC Insurance as lead insurer, arising from a market development initiative led by the Commission with the IFC and others.

It has since scaled in reach. One district became sixty-eight wards across eight provinces the following season, with more than twenty thousand farmers signed up, a higher target this season, livestock added, and a new facility allowing premiums to be paid in grain.

But reach is not cover. Of those twenty thousand sign-ups, the Commissioner has stated publicly that fewer than a thousand paid the premium. Goromonzi covered around four thousand farmers and about eighteen hundred paid. The programme grew roughly fivefold while the number of farmers actually covered fell.

This is a proof of concept, not a failure. The mechanism was built, priced and paid in this market. What is missing is not the machinery but everything between building the product and getting somebody to buy it. The distance between a proof and a market is not invention. It is decision.

4. Who the market actually is

The assumption that the mass market is uninsurable, too poor, too remote, too small a premium to bother with, does not survive contact with the evidence. Some of that market cannot yet be reached. Some can be reached but cannot yet be priced. Neither is permanent, and neither means those households should go unprotected.

The majority of Zimbabwe’s economy sits outside the formal financial system on every measure, and that share has been growing. Around seven in ten of the country’s farmers are smallholders. The small business segment is formal enough to have assets worth protecting and informal enough that nobody has designed a product for it.

This is a financial inclusion problem before it is a climate problem, and the two are the same conversation.

On gender. Women hold less land title, less access to credit and less access to formal financial products of every kind, and they do a large share of the region’s farming on the smallest plots. The people most exposed to climate shocks are the people the industry reaches least. Put commercially: any distribution model that screens on land title, on collateral, or on a formal employment record is not a neutral design choice. It is a decision about who the customer is, and it is one most insurers made by inheritance rather than intent.

An inclusive insurance market is not a charitable one. It is a complete one. And the uninsured majority is not a social problem sitting outside the industry. It is the ceiling on it, and the industry built that ceiling itself.

5. Beyond risk carrier

Insurers have four available roles and generally play only the first.

Risk carrier. Necessary, and in principle the least differentiated thing the industry does.

Risk advisor. The industry holds more data on how things go wrong than almost any institution in the economy, and uses it almost exclusively to price rather than to advise. The client who takes advice and avoids the loss is worth more than the client who has the loss and gets paid.

Investor. Where long-term capital goes shapes what gets built. Most investment mandates now mention climate somewhere, but few if any connect the investment side to the underwriting side. Every investment decision is already a climate decision whether or not it has been written down that way. Financing irrigation, refrigerated storage and resilient capacity builds adaptation into the economy being insured. Financing the alternative builds exposure that returns as a claim, which means insurers can be underwriting risks their own portfolios help create.

Catalyst. A price signal moves behaviour faster than a rule.

The larger opportunity is integration rather than addition. Not a climate committee or a climate lead, but the question being asked inside the existing underwriting meeting, about the existing book.

6. What Kenya took forty years to learn

Kenya’s first agricultural insurance scheme dates from the 1940s and was abandoned in the 1970s. A mobile-delivered index pilot in 2009 restarted the effort. Government programmes followed in 2015 and 2016. In 2023 the National Agricultural Insurance Policy consolidated everything into a single framework now covering forty of forty-seven counties and more than 1.8 million farmers.

Penetration in Kenyan agriculture remains below one percent. It is not a finished success. But it demonstrates three requirements:

• Every layer connected. Index cover for speed and indemnity for accuracy, with the catastrophe tail transferred through quota-share treaties, catastrophe bonds and weather derivatives.
• The state as market-shaper, not market-maker. Government set the framework, subsidised premiums and redirected several billion shillings a year of relief spending into risk financing. It did not become the insurer.
• Distribution and data that already existed. The mobile money network already in the farmer’s hand, and satellite indices instead of loss history that was never collected.

That programme reached forty-two percent women, with no gender campaign and no target. Distribute through a phone and price off a satellite, and you stop screening people out through branches, paperwork and collateral. Reach the market properly and inclusion stops being a target. It becomes a by-product.

Ghana answers a different question. A mobile operator and an insurer built life cover given free in proportion to airtime already purchased, the operator funding it because it reduced customer churn. It reached a million people. At launch barely five percent of adult Ghanaians held any insurance; that single product more than doubled the size of the market, and over nine in ten of those covered had never held a policy before. Not a better product. A better answer to who already has the customer’s trust and the customer’s money.

7. Where the competition moves next

For a century, insurers have competed downstream of the loss. The next generation of African insurers will compete on how effectively they help prevent it.

A loss prevented costs nothing to settle. No handling cost, no assessor, no dispute, no reinsurance recovery, no capital strain. It is the highest-margin outcome available to an insurance business, a logic the industry has applied to fire for a century and never extended to climate.

It is also the one thing a foreign reinsurer cannot do remotely. Capital can be imported. Knowledge of a district, a crop and a customer cannot. And prevention requires warning, which for once exists: the forecast is out, the planting season is months away, and the question is whether the industry does anything differently this time.

8. Five practical actions

One. Price the correlation. El Niño and La Niña reorganise where rain falls rather than causing drought or flood as such. Zimbabwe’s last three seasons run drought, flood, and a forecast pointing back the other way. Drought exposure in one market and flood exposure in another is not diversification. It is one exposure expressed in two directions: not spreading the risk but doubling it, so the portfolio either wins twice or loses twice.

And on data: the sector does not have a data problem so much as a data-use problem. Decades of loss records, claims patterns and exposure information already exist. What is missing is the connection to weather data, satellite indices, yield records and the payment histories held by mobile operators. The gap is connection, not collection, and connection is cheap.

Two. Build the response layer commercially. Parametric moves money in days without an assessor, and the domestic pool has proved it works here. It also carries basis risk, the gap between what the trigger says happened and what actually happened. It pays a trigger, not a loss, which is why it cannot stand alone.

Three. Connect the layers. Protection has to respond fast, settle accurately and rebuild capacity. All three exist in this market. The handoffs do not. Nothing carries a household from a parametric payout into a settled claim, or one season’s experience into the next season’s cover. The failures live between the layers, not inside them.

Four. Stop building distribution. Plug into it. Zimbabwe has over ten million active mobile money subscribers and just over five hundred ATMs. The cooperatives, buyers and input suppliers that farmers already deal with touch millions of people with a commercial relationship and a payment rail in place. Partnership is the operating model, and the insurer that wins will be the one that assembles the best coalition rather than the one with the best product.

Five. Teach the market. Four thousand farmers covered in Goromonzi with eighteen hundred paying; twenty thousand signed up nationally with fewer than a thousand paying. The product existed, the price was fifteen dollars, the pool was capitalised and the regulator was behind it. The further it reached, the smaller the share who actually bought. That is not a pricing failure or an underwriting failure. It is a market that does not yet know what is being offered to it. Customer education is not marketing. It is market creation, and the industry that teaches this market first will own it.

9. Why now

A very strong El Niño is forming. Every major forecasting centre agrees, with high probability that it ranks among the largest events since 1950 and near-certainty that it holds into early next year. Zimbabwe’s Meteorological Services Department has issued a preliminary warning, noting that El Niño conditions historically carry around a sixty-five percent likelihood of below-normal rainfall.

The definitive national outlook arrives after the regional forum later this month. Decisions about the coming season have to be made before that confirmation lands.

That is not a weather problem. That is underwriting.

The question this leaves

If climate risk is reshaping every sector of the economy we insure, how should it reshape the way we design insurance?