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Life assurance companies’ net written premium for the year to December 31,2015 was up 10 percent to $327 million as prudent cost management continued to be a critical survival tool for life companies.
From the reported figures, $266 million in net premium written for the period was attributable to the top three top companies and this shows that business was highly concentrated in favour of the biggest three players.
Gross written premiums for employee benefits products during the year contributed $202 million in gross premiums while the balance of $130 million was individual lines according to the Insurance and Pension Commission in its full year report for life assurance companies.
Fund business during the period contributed 47 percent, group life assurance policies -9 percent and funeral business -32 percent of total gross premium written.
These three products accounted for a combined 88 percent of gross written business.
“The industry is encouraged to appropriately revamp other savings or investment products in order to capture largely the uninsured informal sector,” said IPEC.
For the year under review, players recorded not–taken-up policies amounting to $0,461 million and lapse ratios were reportedly in the thresholds of up to 35 percent.
Life companies paid $159 million in net claims during the year while the industry’s total claims ratio was 46 percent similar to the previous reporting period.
Total outstanding claims amounted to $3,4 million in the year under review.
IPEC said prompt claims payment is a source of competitive advantage in the sector and offsite and onsite checks will include this critical aspect.
The debtor’s book of life companies amounted to $9 million, a 29 percent growth from the previous year.
Given a gross premium figure for the current review period of about $300 million, the average premium collection rate was 97 percent.
Administration expenditure for the period accounted for $61 million of total costs, claims ($160 million) while commission was $15 million. This culminated in a 72 percent combined ratio.
IPEC said life players were adequately capitalized in excess of $2 million as prescribed by Statutory Instrument 21 of 2013.
The industry reported combined capital to liability and liquid ratios of 21 percent and 341 percent respectively.
Reinsurers recorded an 11 percent drop to the current $7,1 million from $7,99 million last year.
“Given depressed local demand for insurance products, re-insurers are encouraged not only to lead in new products development but also maximise on their cross border income streams,” said IPEC.
For the current reporting periods, total expenditure grew 13 percent while net premiums written contracted 11 percent.
Reinsurers realised $1,4 million in underwriting profit and a combined ratio of 89 percent during the period. The cost distribution was made up of claims ($3,3 million), Commission ($1,6 million) and management expenses ($1,4 million.)
The industry reported a current ratio of 345 percent and a capital to liability ratio of 102 percent.
“In the medium to long term, institutions will be required to hold capital which matches their liabilities in line with emerging best practices in addition to regulatory capital,” said IPEC.
In terms of the market share, Baobab Life commanded 58 percent with the FM Re Life and Health getting the balance.
IPEC said players should compete mainly on product innovation and service provision to stimulate the depressed local demand.
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