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Tinashe Makichi Business Reporter
Life Insurance companies recorded a 12 percent year-on-year growth in net premiums written for the quarter to September 30, 2015 to $239 million from $212 million of the previous comparative period.

Gross premium written during the period grew 12 percent to $242 million from $215 million. The gross written premium was further broken down into recurring business. The three biggest players controlled $190 million in net premium written compared to $177 million of the previous comparative period.

“We continue to implore the industry to engage in non-price competition strategies that respond to current socio-economic fundamentals particularly product innovation responding to the informal sector needs and income patterns,” said the Insurance and Pensions Commission in the life report for the quarter to September 30.

Employee benefits business for the period was $96 million up from $150 million of the same period last year while $160 million was individual life assurance.

IPEC said negative growth rate was evident on corporate business as a result of the challenging business conditions and the biggest income stream for life companies during the period was fund business at $113 million, funeral $77 million and GLA $20 million.

“The Commission encourages product innovation in conformity with growth of the informal sector, mobile technology and ‘the internet of things’. The industry reported not taken up policies amounting to $0,97 million and acceptable lapse ratios which suggest good market conduct,” said the Commission.

During the period under review net claims grew 4 percent to the current $113 million from $109 million. However, in gross terms, the major claim categories were surrenders, death and maturity.

Life companies owed policyholders claims in the sum of $3 million during the period.

“Untimely payment not only cultivates reputational but also legal risks and as such, all players must settle all bona fide claims urgently. For the current review period, life assurance companies reported uncollected premiums amounting to $6 million or 3 percent of gross written premium,” said IPEC.

Given gross written premiums of $249 million during the period, average premium collection rate was 97 percent.

During the period, all life companies except Altfin were adequately capitalised to at least $2 million as prescribed by Statutory Instrument 21 of 2013.

The Commission is working with Altfin as to the next course of action in line with the Insurance Act.

Net premiums written by Life Re-insurers during the period went down to $6,995 million from $7,247 million in the comparable period last year.

IPEC said re-insurers should continue striving to be product innovation champions for our industry given the international nature of their business. Re-insurer’s total costs declined 12 percent to $4,97 million from $5,6million while net premium fell 6 percent.

“This indicates a challenging operational environment due to policyholder’s liquidity constraints. Resultantly an underwriting profit of $0,771 million was realised. The combined ratio fell from 92 percent reported previously to the current 87 percent,” said IPEC.

The Commission said players are aware that capital levels were raised to $5 million in respect of re-insurers in the Mid-Term Fiscal Policy Statement.

IPEC said legal enforceability will be pronounced through a Statutory Instrument by the end of the year and the industry should embark on recapitalisation efforts.

During the period Baobab controlled 59 percent in net premium written while the balance was attributed to FML Life and Health. Out of a minimum level of 7,5 percent, the industry’s uptake of prescribed paper was 4 percent.