Doves and Ruvimbo lifts the Funeral assurance industry net premiums in H1 2017
Insurance24
HARARE –The Insurance and Pensions Commission (Ipec) says funeral assurance industry players should take advantage of opportunities presented by micro-insurance products which is a potential growth area for the industry.
This follows the industry’s declined in Technical profits for the half year period to June 30 , 2017, by 40 percent to $2.79 mln as compared to the same period last year $4.67 mln. The decrease was mainly driven by an increase in expenses by 10%.
“Funeral assurance industry players should put in place strategies that will enable them to take advantage of opportunities that presents them including those in micro insurance,” read part of the Ipec H1 Funeral report.
Players, Ipec said are encouraged to rationalize costs to improve their profitability. During the period under review, total costs were up 17 percent to $16.4 million while management expenses also jumped 33 percent to $9.7 million.
However, net premiums written grew by 13% to $80.27 mln, largely propelled by Doves’ growth of 26% and Ruvimbo’s dynamic growth of 117%.
During the period, Funeral assurers operating in the market remained at 9 with no new registrations or cancellations.
Individual life business continues to be the major contributor of net written premium for funeral assurers, contributing 58 percent for the period under review. The remaining 42 percent of net written premium came from group business.
The Commission also urged players in the industry to prioritise compliance issues, saying that most players remain non-compliant with the prescribed asset ratio, timely payment of levies, timely submission of returns and structure of investments.
At the end of the first half, the average prescribed asset ratio in the industry was 1.14 percent which is below the minimum prescribed ratio of 7.5 percent. “Players are required to adhere to the required prescribed asset ratio to avoid being penalized by the Commission”, said Ipec.
Total outstanding claims during the operating period totalled $48,000, and Ipec called on funeral assurance players to prioritise claims payment and make it the core of their operations, as $23,000 of the claims were aged between 30 and 60 days during the trading period.
According to the report, funeral assurance players continue to retain 100 percent of the business they underwrite, although Ipec urged players to have reinsurance arrangements as a prudential risk management mechanism.
The industry’s assets also amounted to $61.74 million at the end of the first half; and were mainly composed of fixed property, money market securities, cash and other investments. There is also a lack of appetite by the industry for money market instruments and other interest-bearing assets, as non-interest generating assets accounted for 83.19 percent of the industry total assets.
Players in the industry were also urged to properly train agents and staff about their products to reduce mis-selling which may be attributed to the high ratio of not taken up to gross written premium ratio. During the first six months of the year, the ratio of not taken up policies to net written premiums of 8 funeral assurance players ranged from 0 to 1.94 percent which are well within commendable ranges; with Orchid being the only an outlier with a high ratio of 35.6 percent.
