- Zimbabwe's US$48 million annual disaster financing gap excludes the cost of replacing damaged public infrastructure
- IPEC confirms most government buildings, schools and hospitals remain uninsured as compulsory coverage gains support
- South Africa faces a R6.5 billion insurance recovery claim while Mozambique expands advance disaster financing
Harare- Zimbabwe's government is moving towards compulsory insurance for public assets after its insurance regulator established that most government buildings, schools and hospitals remain without adequate protection against fire, floods and other disasters. The development follows a February agreement between the Treasury, the Insurance and Pensions Commission (IPEC) and insurance industry representatives to establish a framework for insuring state property.
The initiative addresses a financial exposure that has remained largely outside conventional infrastructure budgeting, with government responsible for rebuilding damaged assets using resources otherwise available for development.
At an insurance research symposium held in Harare on 28 October 2026, IPEC Commissioner Grace Muradzikwa disclosed that research had identified widespread absence of insurance across public buildings and essential service facilities. According to reporting by ZBC News and The Herald, she supported making public asset insurance compulsory, initially targeting state owned enterprises, and cited repeated fires at Mpilo Hospital as evidence of the losses government institutions face without adequate coverage. The Commissioner also acknowledged the challenge of financing premiums, raising a consequential question about the fiscal resources required to implement the proposed framework.
Zimbabwe's experience reflects a broader problem across Southern Africa, where governments have invested substantially in infrastructure while retaining significant financial exposure to disasters. South Africa, despite operating one of Africa's most developed insurance markets, has acknowledged that most public infrastructure remains uninsured. Mozambique's experience with cyclones Idai and Kenneth illustrates the scale of reconstruction financing that can follow major disasters. These examples establish a regional challenge extending beyond insurance penetration to the valuation, maintenance and financial protection of publicly owned assets.
Zimbabwe's Disaster Financing Exposure Extends Beyond US$48 Million
According to the World Bank's Zimbabwe Disaster Risk Finance Diagnostic, the country's average annual disaster response requirement is conservatively estimated at US$81 million, against approximately US$33 million in financial resources arranged before disasters occur. This leaves an estimated annual funding shortfall exceeding US$48 million, with response requirements potentially reaching US$540 million during a severe event of a magnitude statistically expected once in 50 years.
The World Bank makes an important distinction in its methodology. Its estimates cover emergency disaster response and exclude damage to public assets and infrastructure. Consequently, the US$48 million represents a financing shortfall within the modelled response requirements, while the wider exposure associated with rebuilding roads, bridges, schools, hospitals and electricity infrastructure has not been fully incorporated.
This creates a more substantial fiscal concern than the headline financing gap suggests. Where a disaster damages uninsured public infrastructure, government must mobilise reconstruction resources in addition to financing emergency assistance. Budget reallocations can consequently reduce funding available for new infrastructure, while additional borrowing creates further pressure on public finances.
Cyclone Idai demonstrated the scale of the exposure in March 2019. According to the Zimbabwe Rapid Impact and Needs Assessment undertaken with World Bank support, estimated damage and economic losses across affected districts reached between US$542 million and US$616 million. Transport infrastructure accounted for approximately US$164 million, agriculture US$155 million and housing US$132 million.
The World Bank subsequently estimated recovery requirements of between US$584 million and US$803 million across ten sectors. The difference between immediate damage and recovery expenditure reflects the additional resources needed to restore services, rehabilitate infrastructure and improve resilience against future disasters.
Zimbabwe has previously used sovereign insurance to finance drought response. Following the 2023/24 El Niño drought, African Risk Capacity released US$31.8 million under insurance arrangements covering government and humanitarian partners. The government received US$16.8 million, while the World Food Programme and Start Network received US$6.1 million and US$8.9 million respectively.
The arrangement demonstrated the capacity of insurance to mobilise resources following an insured disaster. Its coverage was linked to drought conditions and humanitarian response, leaving damage to buildings, transport infrastructure and other public assets requiring separate financial protection.
IPEC's Proposed Compulsory Insurance Creates a New Policy Responsibility
Zimbabwe's public asset insurance initiative entered a more formal phase on 13 February 2026 when IPEC, the Ministry of Finance and insurance industry representatives agreed to establish a working group to advance implementation under the National Development Strategy 2.
According to IPEC's official statement, the meeting recognised the financial burden of repairing damaged government assets and the potential for insurance to reduce unplanned Treasury expenditure. Wellington Havadi, Chief Accountant in the Accountant General's Department, acknowledged that reconstruction and maintenance costs following damage to public property could be substantial compared with insurance expenditure.
The latest intervention by Muradzikwa in October moves the discussion towards a more defined regulatory approach, including compulsory coverage beginning with state owned enterprises. The shift creates an opportunity for government to establish a national register of insurable public assets, identify their replacement values and develop appropriate coverage arrangements.
The commercial and fiscal constraints remain significant. Premium expenditure requires dedicated budget allocations, while accurate valuations are necessary to establish the amount of insurance government should purchase. The financing structure must also account for differences in the vulnerability and economic importance of individual assets.
A national insurance programme could begin with essential infrastructure whose destruction causes the greatest interruption to public services and economic activity. Hospitals, electricity installations, water treatment facilities and strategically important transport infrastructure would require individual assessments of their replacement values, disaster exposure and operational importance.
IPEC's proposal could also expand demand for catastrophe insurance and reinsurance within Zimbabwe's financial services industry. The scale of the opportunity cannot currently be quantified because no comprehensive public valuation of government assets requiring protection has been identified in the available disclosures.
The immediate policy requirement is therefore to move from general support for compulsory insurance towards an implementable framework defining the assets covered, financing arrangements, responsible institutions and reporting obligations.
South Africa's R6.5 Billion Claim Reveals an Additional Government Liability
South Africa provides evidence that public asset insurance gaps persist even in markets with substantial underwriting capacity.
In a statement issued on 1 August 2025, South Africa's National Treasury acknowledged that most public infrastructure remained uninsured, creating significant contingent liabilities for government. Treasury identified incomplete municipal asset information and inadequate maintenance records among the constraints affecting insurance coverage.
The consequences of infrastructure damage were demonstrated during the April 2022 KwaZulu Natal floods. According to Standard Bank's 2025 catastrophe claims assessment, the disaster generated approximately R62.3 billion in economic losses, with R32 billion insured. The remaining R30.3 billion represented approximately 48.6% of total losses.
The figures include private and public economic activity, but the government's direct fiscal exposure became evident through subsequent budget decisions. In November 2022, KwaZulu Natal allocated approximately R4.2 billion towards flood response and recovery, including resources redirected from existing departmental expenditure.
A separate legal dispute has introduced another form of public sector exposure. In June 2025, Tokio Marine & Nichido Fire Insurance initiated a recovery claim of approximately R6.5 billion against Transnet, the KwaZulu Natal Department of Transport and eThekwini Municipality following extensive flood damage to Toyota South Africa Motors' Prospecton manufacturing facility.
The insurer is seeking approximately R4.5 billion associated with factory damage and rehabilitation, alongside more than R2 billion relating to business interruption losses. The facility remained closed for approximately four months following the floods.
According to reports of the proceedings filed in the Durban High Court, the insurer alleges that the public authorities failed to maintain critical flood prevention and drainage infrastructure, including the Umlaas Canal and associated protective structures.
The allegations remain subject to judicial determination. No final judgment establishing the defendants' liability was identified in the publicly available records reviewed for this article.
The case demonstrates how government exposure can extend beyond the reconstruction of public infrastructure. Through insurance subrogation, an insurer that has compensated a private business may pursue recovery from public institutions alleged to have contributed to the loss. If liability is established, government entities could face additional compensation obligations arising from infrastructure management failures.
The implications extend to Zimbabwe's proposed public asset insurance programme. Insurance coverage cannot substitute for appropriate infrastructure maintenance. Government institutions require enforceable asset management responsibilities alongside financial protection, since neglected infrastructure can create losses affecting both publicly owned assets and surrounding private businesses.
Mozambique Shows the Value and Limits of Advance Financing
Mozambique's experience demonstrates the scale of reconstruction costs and the practical benefits of arranging disaster financing before severe events occur.
Following cyclones Idai and Kenneth in 2019, the Government of Mozambique conducted a Post Disaster Needs Assessment with support from the World Bank, United Nations and European Union. The assessment estimated direct damage from Cyclone Idai at approximately US$1.4 billion and economic losses at US$1.39 billion.
Recovery and reconstruction requirements were estimated at US$2.9 billion across Sofala, Manica, Tete and Zambezia. Including additional areas affected by Idai and Kenneth increased the requirement to approximately US$3.2 billion.
These amounts cover wider economic recovery and reconstruction needs, including private and public assets. They establish the scale of financing required following severe disasters, although they cannot be interpreted as the value of uninsured government infrastructure.
Mozambique has subsequently expanded its use of advance financial arrangements through sovereign catastrophe insurance, contingency resources and development financing.
A more recent development came through the Regional Emergency Preparedness and Access to Inclusive Recovery programme, known as REPAIR, supported by the World Bank and implemented regionally through African Risk Capacity Limited.
Following Cyclone Jude in March 2025, Mozambique activated approximately US$16.9 million in programme financing to support emergency assistance. According to a World Bank case study published in February 2026, the resources reached the national Treasury within seven days of the request, providing funding for urgent relief.
The same World Bank study estimated that REPAIR's advance financing arrangements could reduce the economic cost of emergency disaster response by approximately 43% in Mozambique under its modelled assumptions.
The programme combines national reserves for more frequent disasters, contingent financing for larger emergencies and parametric insurance for severe catastrophic events. It therefore provides an alternative to relying primarily on emergency budget reallocations after disasters occur.
The distinction remains important for infrastructure protection. Advance financing improves the speed and availability of emergency resources, while rebuilding destroyed public assets requires additional funding arrangements and, where appropriate, dedicated property or infrastructure insurance.
The Missing Link Between Infrastructure Investment and Insurance
The experience of Zimbabwe, South Africa and Mozambique identifies a common weakness in the management of public assets. Infrastructure investment decisions frequently receive greater attention than the financial arrangements necessary to protect those assets throughout their economic life.
For insurers, underwriting government infrastructure requires reliable information on replacement costs, physical condition, construction standards, location and exposure to natural hazards. A single flood can damage several public facilities within the same geographic area, creating concentrated losses that may exceed the capacity of individual domestic insurers.
Large government asset portfolios would consequently require structured participation from insurers and reinsurers, supported by credible catastrophe modelling and transparent public procurement.
The financial arrangement must distinguish between losses government can economically retain and those that justify transferring to insurance markets. Frequent, relatively small losses may be financed through dedicated reserves, while less frequent and more destructive events could justify insurance and reinsurance protection.
Zimbabwe's proposed compulsory insurance programme should therefore be supported by an asset valuation and risk prioritisation exercise. Government would need to establish the replacement value of critical infrastructure, the annual cost of premiums, the expected financial losses under different disaster scenarios and the proportion of exposure remaining on the public balance sheet.
A phased approach beginning with state owned enterprises and high priority public institutions would allow Treasury to assess premium affordability and insurers' capacity to provide coverage before expanding the programme.
The private insurance industry would also need to demonstrate sufficient claims paying capacity, transparent pricing and access to reinsurance protection. Government demand alone would not guarantee sustainable underwriting, particularly where catastrophe risks are concentrated and premium affordability remains constrained.
From Policy Commitment to Financial Protection
Zimbabwe's October 2026 disclosure has moved the public asset insurance issue beyond a general policy aspiration. The insurance regulator has identified widespread gaps in government property coverage, supported compulsory insurance and acknowledged the cost constraints facing implementation.
The next stage requires measurable institutional commitments. Treasury and IPEC should establish the value of public assets covered by existing insurance, the proportion remaining exposed, the cost of expanding protection and the arrangements required to finance premiums.
The proposed working group should also clarify which government institutions will be responsible for maintaining asset registers, procuring coverage and reporting claims. These responsibilities are necessary to prevent the programme from becoming an insurance procurement exercise disconnected from broader public asset management.
South Africa's experience demonstrates that even a developed insurance market can leave government exposed to substantial disaster and legal liabilities. Mozambique shows that advance financial arrangements can improve the speed of disaster response, although reconstruction requires broader financing capacity.
For Zimbabwe, the US$48 million estimated annual disaster response financing gap provides only part of the fiscal picture because the World Bank's calculation excludes infrastructure damage. The absence of a comprehensive public valuation of uninsured assets consequently limits the government's ability to quantify its wider exposure.
The economic case for insurance must be established through the cost of retaining these risks, the premiums required to transfer them and the fiscal resources preserved when severe disasters occur.
Africa's public infrastructure protection deficit is ultimately a public finance and asset management problem with significant implications for the insurance industry. Governments are responsible for maintaining essential infrastructure, while insurers can provide financial protection against selected losses that would otherwise place additional pressure on national budgets.
Zimbabwe has established the basis for institutional reform. Its contribution to fiscal resilience will depend on the value of assets brought under effective coverage, the quality of their maintenance and the reduction in unplanned reconstruction expenditure. The country now needs to convert its public asset insurance commitment into financial protection capable of preserving existing infrastructure investment and safeguarding resources intended for future development.
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