Hefty Taxes And Fees Threaten Compliance Insurance Industry Explores Flexible Payment Options

By Shingirai Vambe

Zimbabweans continue to grapple with a heavy tax burden that has left many households struggling to stay afloat, with recent government policy moves compounding the pressure. The latest addition to citizens’ financial woes is the introduction of a radio licence for motor vehicles, pegged at USD $30, which now sits atop already steep quarterly motor vehicle insurance costs ranging between USD $75 and USD $105 for third-party coverage.

For many motorists, this new fee represents yet another blow to their already overstretched budgets. Citizens say the move is “a further burden on an already suffering population,” pointing out that wages have failed to keep pace with the rising costs of basic living. According to current estimates, Zimbabwe’s middle class earns an average of USD $300 per month or ZWG $2,500, figures that barely cover essential expenses such as rent, school fees, groceries, medical aid, and transport costs, let alone hefty insurance and licensing fees.

The financial strain has sparked renewed calls for reform in the insurance sector, with the Insurance and Pensions Commission (IPEC) urging service providers to craft tailor-made packages that meet the needs of low- and middle-income earners. Regulators argue that the insurance sector must evolve in response to the country’s economic realities, where disposable incomes are shrinking, and families are being forced to make tough choices about which bills to pay.

“As the regulator, we continue to call upon insurers to develop more attractive, affordable, and tailor-made packages that respond to the needs of the people. The insurance sector exists to provide protection and peace of mind, but this can only happen if products are relevant to the realities of different consumer segments, including low-income earners, MSMEs, farmers, and informal sector workers. Through initiatives such as the Microinsurance Framework and ongoing product approval processes, we are encouraging innovation that is inclusive, accessible, and value-driven,” said IPEC Commissioner, Dr Grace Muradzikwa.

She further added that affordability of vehicle insurance and flexible payment models are essential for the Zimbabwean economy.

“We are aware that the rising cost of living has affected compliance with certain statutory obligations, including vehicle licensing and insurance. Affordability and flexibility are, therefore, critical to improving uptake. Our position is that insurers should continuously explore mechanisms that make  cover more accessible, including flexible premium payment structures,” added Muradzikwa.

“Breaking down quarterly motor insurance payments into more manageable monthly instalments is one such option that could enhance compliance, particularly among low-income motorists. While as the regulator we do not set premium rates, we engage with industry players on sustainable and innovative approaches that can balance affordability for consumers with the solvency and claims-paying ability of insurers.,” she said.

In response, some companies are stepping up with creative solutions. Champions Insurance recently announced a flexible payment plan that allows motorists to spread out their quarterly premiums into manageable monthly installments. This strategy, the company says, is designed to alleviate the immediate financial pressure on its customers while promoting broader compliance with insurance requirements.

For many motorists, this development has been met with cautious optimism. “It’s a welcome move,” says Tafadzwa Moyo, a commuter omnibus driver from Harare. “Before this, it was impossible to set aside over a hundred dollars at once. At least now we can plan better and keep our vehicles insured.”

This sentiment reflects a growing frustration among citizens over Zimbabwe’s mounting cost of living, which has been worsened by persistent inflation, high unemployment, and stagnant wages. While government officials defend the new licence fees as a means of raising revenue and improving regulatory oversight, critics argue that such measures risk deepening poverty and widening the gap between rich and poor.

IPEC echoed, affordability and access remain central to our regulatory approach. We continue to encourage and supervise insurers to innovate and offer flexible solutions that ensure more Zimbabweans are protected without undue financial strain.

Economic analysts warn that the rising financial burden may also fuel non-compliance among motorists, many of whom already struggle to afford insurance coverage. The fear is that higher costs could push more drivers to operate uninsured vehicles, exposing road users to greater risks and further straining a system already under pressure.

The insurance industry’s willingness to experiment with customer-centric models offers a glimmer of hope. If widely adopted, these measures could make essential services like insurance more accessible, even in a tough economic climate. However, without broader reforms to address systemic economic challenges, many Zimbabweans will continue to feel trapped in a cycle of survival, where critical needs like road safety and financial protection become luxuries rather than necessities.

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