Insurance cover uptake depressed in Q2 of 2023
The uptake of insurance products remained depressed during the second quarter of the year due to the tough operating environment during that period, with life assurers recording only 7 percent in new business, according to the Insurance and Pensions Commission (IPEC).
IPEC, which regulates the insurance and pension industries, said the composition of new business declined from 8 percent to 7 percent between June 2022 and June 2023, as policyholders were only maintaining their policies.
“Uptake of insurance products continues to be depressed as noted by the distribution of business with recurring business contributing about 93 percent of the GPW (Gross Premium Written) for life assurance sector with only 7 percent attributable to new business,” said IPEC.
Traditional life insurance products, which include term assurance, endowment policies, pure endowment and whole life, accounted for only 8,2 percent of business written by life assurers, the majority of which are legacy products.
“Legacy products are dying in the market as policyholders are reluctant to take up more products of such nature. The commission is working closely with the industry through the Life Offices Association and the Government to find ways of reviving the sector,” said IPEC.
The commission has since drafted guidelines on product relevance, which is currently receiving input from the industry.
The sector reported a Gross Premium Written of $119,7 billion, a nominal increase of 550 percent 18,5 billion reported for the half-year of 2022. The sector experienced inflation-adjusted growth in GPW of 175,8 percent.
Growth in GPW was mainly attributable to premium adjustments in line with rising inflation and new business, though on a small scale as the ratio of new business to the total premiums collected accounted for only 7,04 percent.
Recurring premiums and new business written increased in nominal terms by 463 percent and 558 percent, respectively as compared to the same period in 2022.
The two products, which contributed to the significant increase were funeral assurance and group life assurance business.
GPW for life reassurances grew from $595 million reported for the half-year to 30 June 2022 to $9 billion as at 30 June 2023. The life assurance sector reported foreign currency business amounting to US$23 million, which translated to a growth of 155,6 percent from the US$9 million reported in the second quarter of 2022.
The funeral assurance business was the major contributor with Nyaradzo Life Assurance Company writing 40 percent of the business in foreign currency.
The life reassurance sector reported foreign currency business amounting to US$1,7 million for the period ended 30 June 2023.-herald
