Insurance firms under threat

HARARE - Zimbabwe's insurance companies are facing an uncertain future after the Insurance and Pensions Commission (Ipec) has hiked minimum capital requirements by 66 percent to $2,5 million.

The insurance watchdog yesterday said although all non-life insurance companies had complied with the $1,5 million minimum threshold at the end of the fourth quarter of 2015, plans were underway to increase the fees.

“...going forward the commission will be assessing compliance with minimum capital requirements subject to consideration of permissible assets as shall be defined in a Statutory Instrument that the Commission will gazette in due course,” Ipec said in its fourth quarter report.

Market experts, however, say the new regulations are likely to result in the closure of more insurance firms due to the current liquidity crisis in the country. 

This comes as Zimbabwe’s economy is struggling to find traction since the 2013 elections that ushered President Robert Mugabe and Zanu PF party into power resulting in the closure of many companies.

Meanwhile, Ipec said all non-life insurers had reported solvency margins above the prescribed minimum of 25 percent as at December 31, 2015.

“The industry average solvency margin for direct non-life insurers improved from 65,2 percent as at September 30, 2015 to 70,3 percent as at December 31, 2015,” the watchdog said.

During the period under review, non-life companies recorded a 3,21 percent  growth in gross premium written (gpw) from $208 million at the close of 2014 to $214,7 million during the period under review.

“Gross premium written amounting to $92,7 million was generated through insurance brokers. On the other hand, the business written by reinsurers increased from $100,3 million for the year ended December 31, 2014 to $103,8 million for the year under review,” Ipec said.

Reinsurance brokers generated business worth $70,1 million on behalf of reinsurers, as motor and fire insurance remained the dominant classes of insurance in the non-life insurance sector. The report — which details the performance of the non-life insurance sector during the period under review — also showed that the number of registered players, including insurance agents and loss assessors, increased from 597 as at September 30, 2015 to close the year at 609.

“Non-life insurers reported total gross premium written (GPW) amounting to $214,7 million for the year ended  December 31, 2015 compared to audited GPW of $208 million reported for the year ended December 31, 2014,” the watchdog said.

Total asset base for the insurance industry marginally increased from $343,6 million as at September 30, 2015 to $371,1 million as at December 31, 2015.

“The industry average prescribed assets ratio for non-life insurers was 7,25 percent as at December 31, 2015 which was above the minimum requirement of five percent.

“However, only five insurers out of the 21 operating insurers were compliant with the minimum prescribed asset ratio,” Ipec said.

Non-life reinsurers, on the other hand, made strides towards investing in prescribed assets with the industry average prescribed assets ratio of 8,9 percent for the period under review, up from 6,51 percent prior period. Five out of the eight registered reinsurers were compliant with the minimum prescribed assets ratio as at December 31, 2015.

Profit after tax for direct insurance companies decreased from $10,25 million for the year ended December 31, 2014 to $4,6 million for the year under review attributed to an upsurge in net incurred claims.

On the other hand, reinsurers reported total profit after tax of $3,9 million for the period under review compared to $402 573 reported for the year ended December 31, 2014.

“The increase in profit after tax for reinsurers was on the back of increased business volume coupled with a decrease in net incurred claims,” Ipec said.

 

Comments (1)

Which are the correct or good insurance companies that one can take especially in full cover motor vehicle insurgence

Farai - 11 April 2016

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