Announcements Research

GCR Assigns the Zimbabwean Medical Schemes Sector Risk Score

Summary

Johannesburg, 16 July 2021: GCR Ratings (“GCR”) has assigned the Zimbabwean Medical Schemes Sector Risk Score of 1.75. The score is underpinned by very limited regulatory oversight and transparency on industry performance, albeit evidencing low risk to earnings. However, we still see downside risk to membership levels amidst ongoing economic challenges.

The Zimbabwean Medical Schemes Sector Risk Score is available for download at gcrratings.com/risk-scores and relevant sector research pieces are available at: http://gcrresearch.com/reports/house/industry-reports/.

Zimbabwean Medical Schemes Sector Risk Score

The Medical Schemes sector risk score (ranging from 0 to 15) is a key factor in the operating environment component score. The core of the GCR Ratings Framework is based on GCR’s opinion that an entity’s operating environment largely frames its creditworthiness. As a result, the operating environment analysis anchors risk scores under the GCR rating methodology. GCR combines elements of the country risk and sectoral risk analysis to anchor a medical scheme to its current operating conditions. For more details on any of the above, please read the related criteria and research listed below.

GCR will periodically publish an updated “GCR Zimbabwean Medical Schemes Sector Risk Score”.

Zimbabwean Medical Schemes Sector Risk Score

Zimbabwean Medical Schemes, Sector Risk Score 1.75. Country Risk Score 0*, Mapping Table 0.0 to 1.00

The Zimbabwean medical schemes sector risk score of 1.75 is restrained by a weak regulatory environment, evidenced by limited regulatory framework, enforcement and implementation to support, guide, and control schemes’ activities. Furthermore, note was taken of low levels of transparency, with limited track record on industry performance. Nevertheless, earnings risks are viewed to be low, stabilised by contribution increases in line with inflation. In this respect, industry density is in line with mature regional peers at around USD250, although corresponding to a very low penetration at around 0.2% which is expected to remain constrained given that industry growth potential likely to be subdued by additional economic challenges emanating from the COVID-19 pandemic. The Zimbabwean medical scheme industry presents an oligopolistic structure, dominated by three major schemes collectively accounting for about 75% of industry contributions whilst the remainder is fragmented amongst the rest of players. This structure is expected to be maintained going forward, underpinned by high barriers to entry embedded in the historical development of the industry.

*Country risk score as at date of publication.

Analytical contacts

Primary analyst Matthew Pirnie Group Head of Ratings
Johannesburg, South Africa MatthewP@GCRratings.com +27 11 784 1771
Primary analyst Linda Matavire Analyst: Insurance Ratings
Johannesburg, South Africa LindaM@GCRratings.com +27 11 784 1771

Related criteria and research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Insurance Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, July 2021
GCR Financial Institutions Risk Scores, June 2021
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