via Insurance sector tipped to grow – DailyNews Live 12 August 2015
HARARE – Zimbabwe’s insurance industry is set to register double digits growth this year — in both the life and non-life sectors — despite deteriorating economic conditions in the country, an international research group has said.
Business Monitor International (BMI) in its latest report on Zimbabwe said the life sector will continue to dominate the insurance market and outpace non-life growth, given the attractiveness of the former as a long-term savings option.
“However, one major insurance company — Old Mutual — dominates the market, which will hurt competitiveness,” said BMI.
The country’s insurance sector, which is on the recovery path after having gone through a difficult patch in the last few years, is currently bogged down by operational challenges resulting from political and business uncertainty.
But BMI remains cautiously optimistic for the prospects of Zimbabwe’s insurance industry.
“Retention ratios are high, claims ratios are low and strong growth is expected to continue. There are, however, many persistent issues and threats. As a young insurance market, the regulatory framework remains untested, particularly in the fast-growing life sector,” said the international research firm.
This comes after a recent report by the Insurance and Pension Commission (Ipec) revealed that non-life insurers reported total gross premium written (GPW) amounting to $214,91 million for the year ended December 31, 2014 compared to $207,69 million in the corresponding period in 2013.
“Gross premium written amounting to $90,94 million was generated through insurance brokers. On the other hand, the business written by reinsurers increased from $99,52 million for the year ended December 31, 2013 to $101,20 million for the year under review,” said Ipec.
In the period under review, reinsurance brokers generated business worth $63,61 million on behalf of reinsurers.
The insurance commission noted that asset base for the insurance industry increased marginally from $326,72 million as at September 30, 2014 to $329,9 million by end of December last year.
“The industry average prescribed assets ratio for non-life insurers was 1,31 percent as at December 31, 2014. None of the direct non-life insurers were compliant with the minimum prescribed assets ratio as at December 31, 2014. Non-life reinsurers, on the other hand, made significant strides towards investing in prescribed assets with the industry average prescribed assets ratio of 4,04 percent as at December 31, 2014, up from 1,67 percent as at September 30, 2014,” said Ipec.
Profitability for both direct insurance and reinsurance business deteriorated during the period under review mainly owing to depressed business growth in the wake of increasing operating expenses, claims and commissions.
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