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Business Reporter
The Funeral Assurance sector’s technical profits for the second quarter to June 30, 2017 fell 41 percent to $2,79 million from $4,67 million with the Insurance and Pension Commission saying there is need for players to tap into opportunities that are presenting themselves in micro-insurance. According to the Insurance and Pension Commission (IPEC) report for the second quarter 2017, the decrease in technical profits was driven by a 17 percent increase in total costs (mainly driven by a 33 percent increase in management expenses). Net profit after tax for the period amounted to $1,57 million, according to the regulator.

“Players are encouraged to rationalise costs to improve their profitability. Funeral assurance industry players should put in place strategies that will enable them to take advantage of opportunities that presents themselves including those in micro-insurance,” said IPEC.

For the period under review net premium written grew by 13 percent to $80,27 from $70,85 million for the half year of 2016. The three main drivers of growth in net premium written were life assurers who registered growth of 16 percent, Doves Funeral Assurance Company with a growth of 26 percent and Ruvimbo Funeral Assurance Company who registered growth of 117 percent. On the other hand, five funeral assurers registered negative growth varying from a negative 2 percent to a negative 65 percent.

“The Commission encourages players to take a lead in developing innovative micro insurance products as this is a growth area in terms of future market growth.”

The report said for the period under review most of the earnings for the funeral assurance industry emanated from core business activities which makes them high quality earnings. The funeral industry recorded an average return on equity of 4 percent for the period under review, thus on average the industry earned $0,04 for each $1 of equity invested.

The average return on assets for the industry was 2,46 percent and IPEC said this level of profitability is on the low side compared to international benchmarks. Total outstanding claims for the period amounted to $48 000. Out of those claims, an amount of U$18 000 were aged between 0 to 30 days while an amount of $23 000 were aged between 30 to 60 days. Of these claims $23 000 were aged more between 30 to 60 days. The report said the funeral claims are urgent in nature and should be settled within 48 hours.