Tinashe Makichi Business Reporter
Total gross premium written by non-life insurers for the quarter ended March 31, 2016 amounted to $66 million from $70 million due to declining business generated from fire and motor insurance during the period.
In the short term (non-life) insurance report for the first quarter of 2016, the Insurance and Pension Commission said the decrease in business written during the quarter is attributable to the slowing down of the economy since the insurance industry performance usually follows the fortunes of the economy.
“Generally the major classes of business reported decreases in gross premium written during the quarter under review. The Commission, however, noted significant discrepancies between the volume of business written by insurer under bonds/guarantees and the figures reported by non-life reinsurers under the same business class,” said IPEC.
The Commission said risk appetite of non-life insurers remained unchanged as evidenced by the industry average risk retention ratio of 53 percent reported for the quarter ended March 31, 2016.
During the quarter, insurance brokers reported gross premium written amounting to $24, 59 million. The decrease in business generated by insurance brokers during the quarter is tandem with the trend observed for non-life insurers and also the prevailing hard economic conditions played a leading role.
Total gross premium written by non-life reinsurers during the quarter increased to $35,52 million from $28,82 million.
Business generated by reinsurance brokers during the quarter under review amounted to $19,46 million.
IPEC said motor and fire insurance remained the dominant classes of insurance in the non-life insurance sector.
All operating underwriters reported capital positions which were compliant with the regulatory minimum of $1,5 million as at 31 March 2016.
Total assets for the insurance industry amounted to $390 million reflecting a 5, 17 percent increase from $371,12
million reported as at December 31, 2015.
The industry average prescribed assets ratios for non-life insurers and re-insurers were 10,96 percent and 8,18 percent as at March 31, 2016, which were above the minimum requirement of 5 percent.
“In spite of the foregoing observation, only seven direct non-life insurers and five non-life re-insurers out of the 20 and eight operating entities respectively were compliant with the minimum prescribed asset ratio,” said IPEC.
Owing to the decrease in volume of business written, total profit after tax for non-life insurers decreased to $2,39 million from $3,92 million.
On the other hand, non-life re-insurers reported total profit after tax of $3,82 million compared to $2,34 million recorded in the comparative period last year.
The increase in profit after tax for reinsurers was buoyed by increased business volume coupled with a decrease in net incurred claims.