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Business Reporter
The Insurance and Pensions Commission will deal with all non-life insurers that are not investing in minimum prescribed assets as required by law.
Short- term insurers are supposed to invest a minimum of 5 percent of their assets in prescribed assets. However, according to short-term (non-life) insurance report for the quarter ended December 31, 2013 only five out of 29 operating non-life insurers reported some investment in prescribed assets.

IPEC said while it appreciates that there have not been adequate instruments with prescribed asset status on the market, it is seriously concerned with the situation.

“Necessary regulatory action shall be taken to deal with institutions which do not make an effort to comply with the minimum prescribed assets ratio.”

Investment assets for non-life insurers amounted to $59,94 million during the period under review, contributing 36,49 percent of the total asset base.

The proportion of total assets in the form of investments was, however, considered to be relatively low, a situation which compromises the income generating capacity of assets.

This was because the investments were meant to support liabilities that amounted to $99,34 million as at 31 December 2013, and ordinarily a huge portion of liabilities should be supported by investments.

Other assets were mainly made up of debtors, including premiums receivable, as well as inventory and amounted to $59,67 million and contributed 36,27 percent of total assets. IPEC said short term insurers should devise strategies to ensure their assets are largely skewed towards investments in a bid to boost their income generating capacity as well as improve sustainability of assets.

Meanwhile the industry’s average ratio of premium debtors to total assets deteriorated marginally from 23,64 percent as at September 30, 2013 to 23,83 percent as at December 31, 2013.

“Notwithstanding the low average premium debtors to assets ratio, a number of non-life insurers reported premium debtors which accounted for relatively high proportions of their total assets with the highest proportion being 58,19 percent. Such a situation compromises the asset quality of the said insurers and may also have a negative bearing on the solvency of the same insurers,” IPEC said.