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Total net premiums for life and reinsurance companies for the half year to June 30, 2015 increased 22,3 percent to $159 million from $132 million recorded in the previous comparative period.
During the period under review, life companies paid $68 million in net claims compared to $66 million in 2014, which is a six percent growth.
“Players generally reported timely settlement of claims. This is commendable given that ageing claims is a risk indicator for insurers.
“However, players must vigorously continue to manage insurance fraud risk given recent press reports in respect of some market players,” said the Insurance and Pensions Commission in its report for the period.
During the period, players wrote $157 million in gross written premium compared to $128 million in the prior comparative period while of these recorded 63 percent was employee benefits business growing from 74 percent of the prior year. The remaining 37 percent was individual lines business.
Three big companies controlled $124 million of net premium written during the period with balance being split among the remaining eight companies. The report covered 11 life assurance companies and two reinsurance companies.
Fund business, funeral, group life assurance and other policies constituted 89 percent of gross written business compared to 80 percent in 2014.
“This suggests weak financial capacity and awareness of other product lines. We continue to believe that there is still scope for players to promote uptake of other policy types through micro-insurance assisted by the emergency of mobile network operators as both agents and a viable mode of payment
“As liquidity constraints persist in the economy, the industry, particularly individual business, reported high lapse ratios and policies that were not taken up amounting to $1 million,” said IPEC.
The life industry reported premium debtors amounting to $8 million during the period against a gross premium written of $157 million.
Consequently, the average premium collection rate continued to be 95 percent. As at June 30, 2015, the life assurance industry reportedly held investments worth $507 million in properties compared to $552 million in 2014, $445 million in equities, $215 million on the money market, cash assets worth $44million, other assets amounting to $311 million while prescribed assets remained flat at three percent.
During the period under review, total industry assets grew by one percent to $1,61 billion from $1,59 billion reported in the previous period with the marginal growth reflecting a challenging investment climate in the country.
Except for Altfin Life Assurance Company, the industry was adequately capitalised as prescribed by Statutory Instrument 21 of 2013.
IPEC said it has appointed an actuary to look into the sustainability and financial soundness of Alfin Life and appropriate remedial measures will be advised in due course.
Reinsurers wrote $4,3 million in net premiums during the period under review which is an 11 percent growth from the previous period last year.
Baobab Life and Health controlled 56 percent of Net Premium Written while the balance was underwritten by FMRe.
IPEC will continue to encourage reinsurers to take a lead in complementing the Commission’s efforts by promoting local technical expertise in micro-insurance underwriting using their experiences and partnerships internationally.
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