As gold output climbs, insurance cover lags behind

Zimbabwe's mining sector - the backbone of the economy and the country's largest foreign currency earner - is undergoing significant transformation, with evolving risk trends increasingly reshaping the insurance landscape, particularly for artisanal and small-scale miners (ASM).

The sector contributes more than 75 percent of national export earnings and has seen rapid growth in artisanal gold mining. Artisanal miners now account for over 60 percent of gold deliveries to Fidelity Gold Refinery (FGR), overtaking large-scale producers.

In 2025, Zimbabwe delivered a record 46,7 tonnes of gold to FGR, surpassing the previous high of 36,5 tonnes achieved in 2024. Artisanal and small-scale miners powered the milestone, delivering 34,87 tonnes - representing 74,5 percent of total output.

Despite this growing dominance, insurance penetration in the artisanal segment remains critically low, exposing miners, financiers and the broader economy to significant risk.

Artisanal mining is inherently hazardous. Shaft collapses, underground flooding, equipment accidents and exposure to harmful substances are common. Theft of ore, fire outbreaks and regulatory disruptions further compound operational risks.

For small-scale operators who depend on daily production, a single accident can erase years of effort and plunge families into financial hardship. Yet many remain uninsured.

Insurance and pensions consultant Mr Tinashe Moyo said rising mine accidents, collapses and flooding incidents have heightened underwriting risk within the mining portfolio.

"Artisanal mining is largely informal, with limited adherence to safety standards. From an insurance perspective, this increases claims exposure, particularly under accident, liability and life cover policies," he said.

Frequent collapses during the rainy season have resulted in fatalities and equipment losses, complicating risk assessment for insurers.

While large-scale mining houses typically carry comprehensive cover - including property damage, business interruption, machinery breakdown, public liability and environmental impairment insurance - most artisanal miners operate without formal protection.

Young Miners Foundation chief executive officer Mr Payne Farai Kupfuwa said expanding insurance coverage in the ASM sector is essential.

"Implementing insurance policies for artisanal and small-scale miners is complex, but it is a crucial step towards improving safety standards and financial protection. Insurance companies may be hesitant due to the high-risk profile of the sector, but with proper risk assessment and tailored policies, it is feasible," he said.

Mr Kupfuwa noted that some insurers are already offering mining products covering machinery breakdown, property damage, medical aid and funeral policies.

"The benefits of insurance cover could significantly improve safety standards and financial protection. Downtime due to accidents affects production. Insurance can cushion miners against such disruptions," he said.

He added that insurers often require policyholders to adhere to safety standards, promoting best practices and reducing risks.

Insurance, he said, could also encourage formalisation and sustainability within the sector.

"Formalisation increases Government revenue and promotes sustainable mining practices. The challenge is affordability and awareness. Premiums must be tailor-made to suit artisanal miners' income patterns," he said.

A key obstacle remains the informal nature of much artisanal mining. Many operators lack registered entities, audited financial records, geological surveys or proper asset valuations - all essential for underwriting.

Gwanda-based artisanal miner Mr Themba Ndlovu acknowledged the benefits of insurance but highlighted practical challenges.

"Mining is risky and we understand that. Insurance would help in cases of accidents or equipment theft. But many of us operate informally. Some insurers require registration documents and financial records which we do not have," he said.

Affordability is another concern.

"When gold deliveries fluctuate, it becomes difficult to commit to monthly premiums. But not having insurance is also a risk," he added.

Climate change has introduced new vulnerabilities. Increased rainfall variability has led to flooding of pits and shafts, while prolonged dry spells heighten dust-related health hazards and fire risks.

Environmental liabilities are also growing. Insurers are cautious about providing environmental cover where formal management plans are absent.

At the same time, theft and armed robberies targeting gold producers are on the rise. Insurers now impose stricter security requirements, including licensed security services and secure storage facilities, before extending cover - standards many artisanal miners struggle to meet.

Government has intensified formalisation efforts through licensing, training and improved gold-buying systems. While welcomed by insurers, compliance gaps persist.

Zimbabwe's insurance sector also faces capital adequacy and currency challenges, limiting its capacity to underwrite high-severity mining risks without reinsurance support.

Reinsurers demand strict compliance standards, which often translate into higher premiums and tighter policy conditions for small-scale operators.

However, analysts say the growing economic importance of artisanal mining presents an opportunity for innovation. Micro-insurance models, group policies through mining co-operatives and mobile-based premium payment systems are being explored to improve access.

"There is room to design simplified, affordable products that respond to the realities of artisanal miners. Formalisation and financial inclusion will be key drivers," said Mr Moyo.

As artisanal miners continue to dominate Zimbabwe's gold output, the disparity in insurance coverage remains stark.

Experts warn that without improved insurance penetration, the sector remains vulnerable to operational shocks that could reverse productivity gains and deepen social vulnerability.

Strengthening safety compliance, accelerating formalisation, expanding financial inclusion and developing tailor-made insurance products are seen as critical steps toward building a more resilient and inclusive mining insurance framework in Zimbabwe.