Non-life insurance companies record a 9.25% surge gross premium written during Q2 2017
Insurance24
Harare- The Insurance and Pension Commission says it is concerned with total assets of 31.46% for short term life insurers which is being concentrated on premium debtors and fixed assets.
In its half year report for Short Term (Non-Life) Insures Ipec said it is important for insurers to structure their investments in a manner that would respond to their obligations.
During the period , total assets attributable to cash and cash equivalents, money market investments, prescribed assets, technical assets and equities which can easily match non-life insurance liabilities were considered healthy at a total of 49.35%.
“However the Commission is concerned with total assets of 31.46% being concentrated on premium debtors and fixed assets. It is important for insurers to structure their investments in a manner that would respond to their obligations” read the report.
The asset base for non-life insurers increased 16.62% to 222.81 million in the half year from $191.06 million in 2016. The increase in total assets was mainly attributed to an increase in value of equities from $10.07 million as at 30 June 2016 to $22.83 million as at 30 June 2017.
The asset base for non-life insurers was considered to be moderately concentrated in fixed assets and premium debtors while the two asset classes accounted for 13.12% and 18.34% respectively for the period under review.
“The proportion of total assets attributable to cash and cash equivalents, money market investments, prescribed assets, technical assets and equities which can easily match non-life insurance liabilities were considered healthy at a total of 49.35%,” said IPEC.
The non-life insurance industry reported an industry average prescribed assets ratio of 12.03% as at 30 June 2017 reflecting a 1.23% change from 10.80% reported as at 30 June 2016.
Despite the industry average prescribed assets ratio being compliant with the minimum requirement of 5%, nine (9), out of the twenty (20) operating insurers, were not compliant with the minimum requirement while a total of three (3) of these insurers did not have any investments in prescribed assets.
“The non-life industry is required to comply with prescribed asset ratio to avoid regulatory action,” said IPEC.
Meanwhile, Non-life insurance companies recorded a 9.25% surge in total gross premium written (GPW) in the second quarter, from $124.90 million realised in the same period last year with the increase in total GPW mainly driven by a growth in business generated from fire, hire purchase and motor insurance industries which constituted 66.59% of total GPW.
As a result, profit after tax for direct insurance companies registering a significant increase of 62 percent to $11.12 million from last year’s $6.88 million; with non-life reinsurers also increasing from $4.72 million to $4.98 million. The report indicated that the increase in profitability was driven by the upsurge in net written premium.
According to the report, the retention ratio, which shows risk appetite for insurance companies, averaged 60.21% this year, increasing from the 57.31% realised last year. There was a slight increase in the retention ratio for non-life reinsurance companies from 62.26% to 63.18%.
There was also a decrease in the number of registered players including insurance agents and loss adjusters from 588 recorded in 2016 to 577 recorded this year.
