Funeral Assurers struggle to meet minimum prescribed asset ratio

Funeral Assurers struggle to meet minimum prescribed asset ratio

Staff Writer

Funeral assurers are continually struggling to meet minimum prescribed asset ratio with an average prescribed asset ratio of 0.16% for the
sector by end of 2021 against a required ratio of 10%.

The Insurance and pensions commission (IPEC) end of year  funeral report shows that all funeral assurers were not compliant with the
minimum prescribed asset ratio.

The total amount invested in prescribed assets was only ZW$4.69 million against the required minimum amount of ZW$287.46 million to
comply with the minimum prescribed asset threshold of 10%.

For the twelve months under review, total technical liabilities for the funeral assurance sector slightly increased by 4.65% in nominal
terms from ZW$1.30 billion as at 30 September 2021 to ZW$1.36 billion as at 31 December 2021, with future policyholders’ benefits being the major component  constituting 99.43% of the technical liabilities.

“For the twelve months ended 31 December 2021, two players dominated the funeral assurance sector in terms of GPW, with a total market
share of 82.8%. The remaining six (6) funeral assurers accounted for the balance of 17.2%.None of the funeral assurers had any reassurance
arrangement(s) in place for the twelve months ended 31 December 2021.” Ipec said.

The inflation-adjusted Gross Premium Written for the funeral assurance sector however increased by 203%   to ZW$830.38 million for
the twelve months ended 31 December 2021, from ZW$274.14 million reported for the twelve months ended 31 December 2020.

During the period six (6) out of the eight (8) funeral assurers were compliant with the regulatory minimum capital requirement of ZW$62.50
million.

The total assets for the funeral assurance sector increased by 21.15% from ZW$2.37 billion as at 30 September 2021 to ZW$2.87 billion as at
31 December 2021.

Profit before tax for the funeral assurance sector increased by 255% in nominal terms to ZW$166.66 million for the comparative period in
2021 from ZW$46.88 million for the twelve months ended 31 December 2020.

“After adjusting for inflation, the profit before tax increased by 121% from ZW$46.88 million to ZW$103.68 million over the same period.”
Ipec noted