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Insurance firms record impressive growth

BY FIDELITY MHLANGA

GROSS premium written (GPW) by direct life assurers grew 16,4% to $426,05 million for the period ended December 31, 2018 from $366 million in the previous year, a report by the industry regulator has shown.

The latest report by the Insurance and Pensions Commission (Ipec) revealed that growth in GPW was mainly driven by funeral assurance and fund business, which increased to $24,01 million and $18,67 million respectively.

Fund business and funeral assurance continue to be the dominant business classes, accounting for a combined 77,18% of GPW.

In terms of business mix, recurring business accounted for 77,53% of GPW for the year ended December 31 2018, compared to new business, which contributed 22,47% of GPW for the same period

“Growth in the uptake of traditional life assurance products was strong for endowment and weak for group life assurance policies at 166,24% and 10,24% respectively,” Ipec said.

“However, in absolute terms, the growth was insignificant as compared to growth in funeral business.

“The industry is suffering from low confidence levels arising from legacy issues emanating from the lost values experienced due to the hyperinflationary years that culminated in dollarisation of the economy in 2009.”

The regulator said insurance players must move with the tide by adopting product innovation biased towards the ever-growing informal sector to increase new business prospects.

Players in the life assurance sector include CBZ Life, Econet Life, Evolution Life, Fidelity Life, First Mutual, Getsure, Heritage Life, Nyaradzo, Old Mutual Life, ZB and Zimnat.

The number of “not taken up” policies as at December 31 2018 was 6 698, a decrease from 9 220 policies reported as at December 31, 2017. The premium for not
taken up policies amounted to $190 000 compared to $60 000 for the previous year.

“Players should have well- trained staff to avoid mis-selling of products as this will help to reduce lapse ratios and not taken up policies,” Ipec said.

“Players should also properly target customers and sell appropriate products that match the client’s needs and financial position.”

Heritage Life, Evolution Life and Fidelity Life were not compliant with the minimum capital requirement of $5 million as atDecember 31, 2018 as they experienced a deterioration in their capital positions ranging from -0.84% to -26.11% during the period.

The asset base for the life assurance industry as at December 31, 2018 stood at $3,55 billion compared to $2,76 billion reported as at September 30, 2018.

Prescribed assets investments amounted to $321,70 million as at December 3, 2018, which translates into an industry prescribed asset ratio of 9,05%.

This ratio was above the then obtaining regulatory minimum of 7,5%.

However, Evolution Life, Getsure, Heritage Life, Nyaradzo and ZB Life were not compliant with the prescribed asset ratio of 7,5% as at December 31, 2018.

The minimum required prescribed asset ratio for the life assurance industry has since been increased to 15% effective December 31, 2019 through the National
Budget statement.

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