Econet enters the Short term (non-life) insurance space…urged to play fair with competitors
By Insurance24
HARARE, As at 31 December 2017, there were 20 Short Term (Non-Life) companies registered by the regulator, the Insurance and Pensions Commission (Ipec). Business was dominated by companies who had strong capital positions. For instance, during 2017, Old Mutual Insurance Company, Nicoz Diamond Insurance Company and Alliance Insurance Company were the market leaders in terms of GPW with a combined market share of 42.77%.
Elsewhere, in terms of total assets, Old Mutual Insurance Company, Nicoz Diamond Insurance, Alliance Insurance Company and Zimnat Lion Insurance were the market leaders in 2017 with a combined market share of 54.19%.
Meanwhile, only this morning, IPEC handed over a certificate of registration to a new entrant in Non-Life sector. Econet Insurance (Private) Limited is the company whose parent company Econet Wireless Zimbabwe is no new investor in the country’s insurance sector. The group already has Econet Life Limited, a life assurer, which riding on the group’s mobile network subscribers has over 2 million people on its Ecosure platform.
Speaking at the handover ceremony, IPEC acting Commissioner Blessmore Kazengura urged the new company to live up to promise it makes to its clients. “No short-changing of policyholders,” he said, adding that the company should play fair with its competitors.
However, will the entrance of Econet into the short term insurance space be a game changer to the sector?. Its presence in the sector brings more competition to the market leaders on other hand will be a threat to already struggling companies. As at December 2017, sixteen out of twenty insurers were compliant with the minimum capital level of $2.5 million, whilst four insurers reported capital levels below the required minimum in line with Statutory Instrument 95 of 2017.
For Econet Insurance Company, capitalization will not be a challenge, but above all will not be a real issue for under capitalized companies as IPEC is developing the Risk based framework where companies will operate and write business that is covered with the size of their book.
IPEC has since engaged a consultant to develop the framework. A risk-based framework measures the minimum amount of capital that an insurance company needs to support its overall business operations and is used to set capital requirements in line with the size and degree of risk taken by the insurer.
During 2017, the non-life industry according to IPEC recorded growth and resilience despite the challenging environmental pressures.
Non-life insurers reported total gross premium written (GPW) amounting to $236.47 million for the twelve months ended 31 December 2017 compared to $215.97 million reported during the same period in 2016 resulting in a 9.49% growth.
IPEC also challenged the insurers to abide by the investment guidelines in order to sustain their capacity to liquidate their contractual obligations on time.
