Insurance sector in major shakeup

The short-term insurance industry recorded significant growth and a major shakeup in the top insurance companies by capitalisation and asset size, the regulator of insurance and pensions reported in its 31 December 2022 industry report.

The Insurance and Pensions Commission (IPEC), in its fourth quarter of 2022 industry report, highlighted that the short-term insurance industry assets grew by a phenomenal 426 percent from $20 billion recorded as of December 31 2021 to $105,2 billion recorded as of December 31 2022 whilst capitalisation of the sector grew by 379 percent from $11,3 billion as of December 31, 2021, to $54,1 billion recorded as of 31 December 2022.

The industry growth marks the strengthening of its capacity to underwrite insurance and support economic growth. This is a positive development in that a strong insurance industry is quite key in supporting the financial inclusion agenda and economic growth.

Whilst a part of the growth in the industry is naturally attributable to inflationary pressures, it also remains noteworthy that the industry actually recorded growth in real terms due to improved profitability and the introduction of new players into the sector.

At the time of reporting, new players in the insurance industry comprised AFC Insurance Company, which was registered in August 2022 as well as Empaya Insurance Company.

Interesting to note is the fact that one of the latest additions to the list of insurance companies, AFC Insurance, subsequently took the market by storm, gaining the pole position in terms of total assets and capitalisation as of December 31 2022, contributing $13,5 billion to the sector’s total capital of $54,1 billion.

This development makes AFC Insurance Company the largest short- term insurance company by capitalisation, followed by Old Mutual, Alliance and Zimnat with capital positions of $8,9 billion, $4,7 billion and $4,4 billion, respectively.

This comes as a major disruption to the long-standing traditional top insurers list which was previously dominated by the likes of Old Mutual, Alliance, Nicoz Diamond and Zimnat.

IPEC reported that in the comparative period ended December 31 2021, the largest short-term insurers were Old Mutual, Alliance and Nicoz Diamond whose capital positions stood at $2,7 billion, $1,6billion, and $1,3 billion, respectively.

The table below shows the complete breakdown of the short-term insurance companies’ capital positions as reported by the regulator of insurance and pensions.-herald