Zimbabwe’s life insurance industry’s gross written premiums (GPW) for the nine-month period to September 30, 2021 increased 485% to $ 11.7 billion from $ 2 billion for the comparative period in 2020.
The Insurance and Pensions Commission (IPEC) said in its quarterly report for the sector that GPW’s growth was mainly due to significant increases in premiums, particularly in the funeral and group life insurance branches in response to the increase. general inflation.
“GPW’s growth has exceeded year-on-year inflation, which stood at 51.5% as of September 30, 2021.
“On an inflation-adjusted basis, the GPW for direct life insurers grew 286% to $ 7.7 billion from $ 2 billion last year over the same period,” reads. one in part of the report.
At the reference period, the life insurance sector consisted of 12 direct life insurance companies, 4 composite reinsurance companies and 1,323 agents.
According to the report, GPW’s inflation-adjusted positive growth is also attributable to new business and a higher rate of increase of GPW relative to the rate of increase of inflation, as insurance companies- Life have revised premiums in response to changes in inflation.
The growth of the traditional life insurance products business has improved significantly compared to the previous period, with growth rates well above the annual inflation rate which stood at 51.5% at the end of September 2021. .
In terms of business mix, 95.5 percent of total gross premiums written were generated by the funeral business, group life business, and term life business.
“Funeral insurance policies continue to dominate life insurance product lines as they provide defined benefits in terms of funeral services.
“Traditional life insurance products which include term insurance, endowment policies, pure endowment and whole life insurance policies, represented a small proportion of business generated in the quarter,” said the Ipec in the report.
The commission said industry players should continue to be innovative and review their traditional life insurance products to align them with policyholders’ expectations in terms of value preservation and relevance, as this is important given the the current macroeconomic environment.
“It will also help reduce policy irrelevance given the legacy issues surrounding policyholder impairment that occurred with policies prior to 2009,” Ipec said.
In terms of business breakdown by source, the life insurance industry GPW for the nine months to September 30, 2021 was biased towards recurring business which represented 96.48% of total business written.
“The low GPW generated by new business reflects the prevailing volatile macroeconomic environment characterized by high inflation and an unstable exchange rate, thus eroding disposable income and reducing the reliance on life insurance policies,” said declared the Ipec.
For the period under review, the life insurance sector underwent foreign currency transactions for an amount of US $ 3.9 million.
In terms of capitalization, the report shows that the top 11 life insurers who submitted their reports reported capital positions that met the minimum capital requirement of $ 75 million.
According to IPEC, adequate capitalization is crucial for the resilience and protection of policyholders in times of financial difficulty, especially in the event of high claims.
“All stakeholders are encouraged to carry out ongoing self-assessments of capital in accordance with the provisions of Statutory Instrument 95 of 2017.”
The sector’s total assets in nominal terms increased 27% to $ 70.09 billion, from $ 55.12 billion reported as of June 30, 2021.
“The increase in total assets in the sector is mainly due to the increase in the value of stocks on the Zimbabwe Stock Exchange (fair value adjustments) and an increase in the value of fixed properties due to real estate revaluations.” , part of the report revealed.
Fixed properties and stocks made up 91.7% of the total assets of life insurance companies. In nominal terms, the total after-tax profit of life insurers fell from $ 45.07 billion for the nine months to September 30, 2020 to $ 12.81 billion for the current reporting period.