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Walter Muchinguri Harare Bureau
THE Insurance, Pension and Provident Fund has deregistered three insurance companies, Agricultural Insurance Company (Pvt) Ltd, Jupiter Insurance Company (Pvt) Limited and Horizon Reinsurance Company (Pvt) Limited for contravening Section 23 of the Insurance Act.
The cancellations were gazetted under general notice 109 of 2014 in the Government gazette published last week. The three were part of five registered non-life insurers that were no longer operational.
Jupiter Insurance was suspended in 2012 amid indications the company was facing solvency challenges.
Jupiter Insurance Company (Private) Limited and Agricultural Insurance Company (Pvt) limited were first deregistered in May 2010 after they, together with 16 other companies, failed to meet capital minimum requirements of $300,000 for short-term insurance companies in accordance with Statutory Instrument 183 of 2009.
They were subsequently re-registered in February of the following year after meeting the set requirements before they eventually stopped operating.
The development comes as total profit after tax for non-life insurers increased to $12,02 million for the year ended December 31, 2013 from $7,26 million a year earlier.
According to a report released by IPEC for the period ending December 31, 2013 profit after tax for reinsurers increased from to $6,56 million from $0.66 million for the year ended December 31, 2012.
“Notwithstanding some slight improvements in the liquidity position of the reinsurers, the short-term insurance industry was considered to be constrained by liquidity challenges which resulted in failure by some policyholders to timeously pay premiums,” the commission said.
Total gross premium written for non-life insurers increased to $209,84 million during the period under review from $194 million a year earlier.
Out of the business written, $99,42 million was ceded to reinsurers, of which $52,72 million came through reinsurance brokers.
Insurance brokers wrote business with total premium amounting to $94,44 million which constituted 45,01 percent of total gross premium written reported by non-life insurers.
The major sources of business in the short-term insurance industry remained motor and fire insurance.
The fastest growing classes of business in terms of GPW were hire purchase and bonds or guarantees which recorded increases in gross premium of 60,71 percent and 53,76 percent respectively.
Total assets for the non-life insurance industry increased from $312,06 million as at September 30, 2013 to $327,56 million as at December 31, 2013.
According to the report all the short-term underwriters were not compliant with the prescribed assets ratios while only five insurers had investments in prescribed assets.
“On average, there were no significant changes in the risk appetite for short-term underwriters as evidenced by negligible changes in industry average retention ratios during the year ended December 31, 2013,” the commission said.
The commission also noted that a number of insurance companies were experiencing difficulties with capitalisation.
“A number of insurers experienced capitalisation challenges emanating from encumbered assets and high levels of premium debtors,” it said.
Capital verification inspections carried out by the commission on some non-life insurers early this year revealed that some of the institutions had reported assets which were either encumbered or their legal title was yet to be transferred to the said institutions, a situation which compromises the ability of the insurers to use the said assets to back their liabilities.
The commission also discovered that some companies had high premium debtors to total assets ratios as at December 31, 2013 which implied that the bulk of their liabilities is backed by premium debtors.
“In some instances, it was established that some insurers are ‘window dressing’ their capital positions to comply with the minimum capital requirements,” the commission said in its short-term (non-life) insurance report for the quarter ended December 31, 2013.
The number of registered insurance companies and insurance brokers increased from 28 to 29 and 29 to 30 respectively following the registration of Safel Insurance Company and Revival Insurance Brokers during the quarter under review.
Online Reporter