Mixed fortunes for insurance sector

The short-term insurance sector experienced mixed fortunes in the first quarter of 2024, according to the latest industry report from the regulatory authority.

Overall, the sector remained profitable despite a difficult environment, although some insurers and reinsurers experienced losses.

The sector also showed varying levels of compliance with solvency and capital requirements, indicating the need for continued regulatory oversight and support.

According to the Insurance and Pension Commission (IPEC) report for the quarter to March 31, 2024, the industry generated a total of $812,96 billion in consolidated insurance revenue with foreign currency business amounting to US$53,18 million.

The major drivers of the insurance revenue for the period under review were motor, fire, hail, and personal accident classes of business contributing a total of 78 percent.

According to the report, the major sources of foreign-currency-denominated insurance revenue for short-term insurers were motor, fire, hail, and personal accident, contributing a combined 79 percent of the total insurance revenue.

The trend in foreign currency-denominated business is similar to the Zimbabwe dollar business.

Motor insurance accounted for 40 percent of the total insurance revenue.

Foreign-currency-denominated motor insurance business is mainly driven by comprehensive cover as policyholders seek to preserve value.

According to IPEC, micro-insurers contributed $36,54 billion, and insurance brokers reported gross premium income of $708,13 billion.

The total consolidated insurance revenue by short-term reinsurers was $447,14 billion, with US$32,77 million in foreign currency business.

Microinsurers reported consolidated insurance revenue of $36,54 billion, with US$1,45 million in foreign currency business.

Insurance brokers reported a consolidated gross premium of $708,13 billion and US$39,31 million in foreign currency business, while reinsurance brokers reported consolidated gross premium of $256,1 billion and US$17,2 million in foreign currency business.

According to IPEC, out of 20 insurers, seven reported negative insurance service results, indicating losses.

However, the industry made $43,65 billion in profit from insurance coverage. Out of the nine reinsurers, 56 percent or 5 reported negative insurance service results, but the industry still made $4,45 billion in profit.

During the period under review, microinsurers earned $14,69 billion in profit from offering insurance coverage.

The short-term insurers reported total assets of $4,20 trillion, with total investments in prescribed assets amounting to $230,01 billion.

Of the 20 short-term insurers, seven were compliant with the minimum prescribed asset ratio of 10 percent, while 19 out of 20 short-term insurers reported capital positions above the minimum capital requirement (MCR) of $37,5 million.

Short-term reinsurers had total assets of $2,06 trillion and total investments in prescribed assets of $194,16 billion, with 4 out of 9 short-term reinsurers compliant with the minimum prescribed asset ratio of 10 percent.

Microinsurers recorded total assets of $132,50 billion, and all 3 operating micro-insurers were above the MCR of $4,5 million. Insurance brokers had total assets of $313,64 billion, with all 27 brokers above the MCR of $1,5 million, and reinsurance brokers had total assets of $88,04 billion, with all 8 brokers above the MCR of $1,5 million.

-newsday