Insurance In The Age of Climate and Economic Uncertainty

A call for resilience in Zimbabwe and the Region…

By Shingirai Vambe

In an era where the world is increasingly defined by interconnected and compounding risks, from climate change and cyber threats to geopolitical instability, countries like Zimbabwe and its neighbours face a growing imperative to strengthen cooperation, both locally and internationally, to build resilient societies and economies.

Across the African continent, escalating climate risks and underinvestment in disaster risk reduction are beginning to take a tangible toll on the affordability and availability of insurance. As storms, floods, droughts, and other climate-related events grow in frequency and intensity, many Zimbabweans and small businesses remain exposed, without sufficient protection. The evolving landscape raises urgent questions: how can insurance be made accessible and affordable? How can coverage gaps be closed? And how can risk-aware investments be unlocked to safeguard the region’s fragile economic foundations?

The challenge is global, but its implications are especially acute in Southern Africa. In 2024 alone, extreme weather events caused $320 billion in damages worldwide, yet less than half of those losses were insured. For Zimbabwe, where agriculture remains the backbone of the economy and accounts for an estimated 60–70% of employment, this protection gap is particularly worrying. Floods, droughts, and unpredictable rainfall patterns increasingly threaten crop yields, livestock, and rural livelihoods, while insurers are often reluctant to extend coverage in high-risk regions.

The resulting “insurance deserts”, areas where coverage is either unavailable or prohibitively expensive—pose systemic threats to resilience and inclusive growth. Without protection, farmers and small businesses are forced to absorb losses directly, reducing investment, slowing recovery, and deepening economic inequality. This is compounded by underinvestment in proactive measures: disaster risk reduction (DRR) initiatives, such as irrigation, flood barriers, fire-resistant infrastructure, and early warning systems, remain underfunded. Globally, it is estimated that for every $1 invested in pre-disaster resilience, $13 in long-term economic benefit is generated. Yet in many developing countries, including Zimbabwe, a disproportionate share of disaster financing still goes to post-disaster response rather than prevention.

The Insurance Development Forum (IDF) recently convened its 10th anniversary summit to tackle these pressing challenges. Bringing together insurers, policy-makers, and development institutions, the forum called for a redefinition of insurance, not just as a payout mechanism after disaster, but as a strategic partner in building resilient societies. For Zimbabwe and the SADC region, this approach could transform the way governments, businesses, and communities prepare for the shocks of the future.

One of the summit’s key messages was that insurability must be actively preserved, especially in a warming world. As insurers retreat from high-risk areas due to rising losses and regulatory uncertainty, households and businesses in Zimbabwe and across Southern Africa may find themselves increasingly uninsured. The resulting cycle drives up premiums, limits access to credit, and discourages investment, threatening both economic growth and social stability.

Proactive DRR initiatives, ranging from flood-resistant infrastructure to climate-smart agriculture, are central to breaking this cycle. Public-private partnerships can play a crucial role in supporting these investments, offering incentives for risk reduction, and creating financing pathways that make coverage more accessible and sustainable. For instance, leveraging local data, insurers can guide the construction of more resilient homes and farms, protecting both lives and livelihoods while keeping premiums manageable.

Beyond simply managing risk, insurers have the potential to act as catalysts for climate and economic resilience. With access to climate models, historical data, and long-term capital, insurance providers can co-design solutions that protect communities and promote adaptive strategies. Across the region, innovative approaches are emerging: parametric insurance schemes for drought-prone farmers, coverage for informal sector workers, and insurance for critical environmental buffers such as wetlands and mangroves that shield communities from floods.

In Zimbabwe, such mechanisms could prove transformative. Smallholder farmers, who make up the bulk of the agricultural workforce, could access affordable insurance that compensates them after extreme weather events, helping maintain food production and stabilizing rural incomes. Similarly, regional projects in SADC could benefit from insurance-backed risk mitigation, unlocking capital for infrastructure projects that protect both people and economies from the impacts of climate change.

Another urgent priority highlighted by the IDF is the role of insurance in mobilizing investment for resilient infrastructure. Southern Africa faces a pressing need for robust water systems, climate-adapted roads, and energy infrastructure capable of withstanding extreme weather. Insurance and risk-sharing mechanisms can de-risk investments, enabling both public and private sectors to channel resources into projects that enhance resilience while generating economic returns.

By integrating risk analytics and technical expertise, insurers can help attract private capital, foster regional trade, and strengthen economic integration across Southern Africa. For Zimbabwe, this approach offers a pathway to modernize critical infrastructure, protect vulnerable communities, and support long-term growth while reducing reliance on emergency aid after disasters strike.

As Zimbabwe and the region confront climate change, economic shocks, and systemic vulnerabilities, the insurance industry must evolve from a reactive safety net to a proactive enabler of resilience. Governments, financial institutions, and insurers need to collaborate more effectively, integrating DRR into policy, investing in resilient infrastructure, and extending coverage to previously underserved populations.

The IDF Summit’s discussions underscore that the time to act is now. By leveraging innovative insurance solutions, mobilizing capital, and embedding resilience into planning, Zimbabwe and its neighbours can reduce vulnerability, stabilize markets, and ensure that development gains are protected even in the face of escalating global risks.