This paper analyses challenges being faced by short term insurance companies in Zimbabwe in meeting the regulatory minimum capital requirements. The economic meltdown and the subsequent hyperinflation that besieged Zimbabwe from 1998 to 2008 left an indelible dent on the insurance consuming public’s confidence in the industry. The insurance graveyard for the period spanning from 1998 to 2008 is littered with failed strategies which were implemented in an effort to keep the sums insured close to market or replacement values of the subject matter of insurance. The balance sheets of insurance companies were also progressively eroded over the period. The adoption in 2009 of a multicurrency system consisting of a basket of currencies, namely, the United States of America dollar, the British Pound, the South African Rand, the Euro and the Botswana Pula among others as legal tender in business transactions in the country brought the much need relief and economic stability which had eluded policymakers for a whole decade. However, under the new economic dispensation insurance companies must meet and maintain a minimum regulatory capital to support their underwriting activities. The companies are now facing serious challenges in complying with the new regulations and some have since had their operating licences cancelled by the Insurance and Pensions Commission (IPEC). This paper recommends mergers and acquisition and proactive capital management strategies to save the industry from collapse and ensure that it continues to play its critical role in the socioeconomic development of Zimbabwe.
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