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Non-life insurance companies report $216m GPW in FY2016

Non-life insurance companies report $216m GPW in FY2016

HARARE – Non-life assurers recorded a modest growth of 1.19 percent in gross premium written (GPW) last year. GPW increased marginally from $213.44 realised in 2015 to $215.97 in 2016, data released by the Insurance and Pensions Commission show.

Business Written Trend Since 2012

“The slight overall increase recorded in business written in terms of total GPW was mainly driven by the growth in motor insurance business”, said IPEC in the quarterly Short Term Non-Life Insurance Report.
Total gross premium generated from motor insurance surged by $7.41 million, from $85 million in 2015 to $93.14 million, largely due to the introduction of electric cover notes.

“The business generated by non-life insurers during the year ended 31 December 2016 was largely skewed towards motor and fire insurance. The two business classes accounted for 64.9 percent of total gross premium written”, said IPEC in the report.

During the reporting period, the business written by reinsurers declined relatively from $103.83 million in 2015 to $99.93 million in 2016. Of the $81.16 million premiums written by reinsurers, reinsurance brokers contributed 81.22 percent last year.

The insurance industry’s asset base slightly increased by $3.45 million, to $375.57 million in 2016. “The industry’s average prescribed assets ratios for non-life insurers and reinsurers were 12.08 percent and 12.26 percent, respectively, as at 31 December 2016, compared to the minimum requirement of 5 percent, demonstrating a much higher commitment then required”, said IPEC.

Insurance companies’ risk appetite, as demonstrated by the retention ration, increased by 3.95 percent to 59.59 percent last year. However, there was a modest decline in the non-life reinsurance companies’ retention ration, from 72.2 percent in 2015 to 69.89 percent last year.

The insurance penetration ration remained unchanged, at 1.52 percent, while the average spending on non-life insurance, decreased marginally from $15.31 in 2015 to $15.

Credit Insurance Zimbabwe’s capital position of $1.2 mln in the fourth quarter was not compliant with the minimum capital requirement of $1.5 million. Sanctuary Insurance Company, whose capital thresholds were below the required minimum in the third quarter managed to meet the thresholds in the first quarter, with a new capital position of $1.564 mln.

“The reported capital positions do not however, account for non-admissible assets. The Commission is in the process of promulgating a Statutory Instrument that will see an upward review of minimum capital requirements for non-life insurers to $2,5 million as well as accounting for admissible assets for the capital computations,” IPEC said.

At least half of the 20 registered short –term insurers operating in the country had not yet raised their minimum capital levels to $2.5 million by the December 31, 2016 deadline that was set by Finance and Economic Development Minister Patrick Chinamasa in last year’s budget.

Minister Chinamasa last year proposed to increase minimum capital requirements for short-term insurers and funeral assurers from $1, 5 million to 2,5 million and Life Assurers from $2 million to $5 million.

The upward review of the minimum capital requirements was expected to improve underwriting capacity and contain insurance business within the country.

At least four companies New Reinsurance, Global insurance, KMFS and Navistar were deregistered last year for failing to meet minimum capital requirements and failing to pay claims.

Three insurance brokers: Ambassador, Broksure and Rainbow; did not meet the $100,000 minimum capital required in the fourth quarter.

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