The Sunday News
Dickson Mangena, Business Reporter
NET premiums by Life Insurance companies increased by 12 percent for the period in the first six months of the year compared to the same period last year buoyed by an increase in fund business and group life assurance income streams.
According to the latest Insurance and Pensions Commission Report for the first half of 2016 released last week the net premiums increased by $19 million while that of reinsurers dropped by $0,9 million from January to June compared to the same period last year.
“The growth was fed by fund business and group life assurance income streams although business continued to be concentrated around the three biggest insurers who wrote $144 million or 83 percent of the net premiums for the current period compared to $124 million dollars for the period that ended in June 2016” said IPC.
Reinsurers on the other hand wrote $3,5 million in net premiums, a 20 percent decline rate from $4,4 million reported in the same period last year.
“This may be a result of reduced effective demand locally and therefore players must increase bias towards regional and international sources of business for enhanced sustenance,” said IPEC.
Life reinsurance is critically important to the viability of the life insurance industry. It is the essential tool that allows life insurance companies to spread their risk and provide dynamic, valuable products and services to consumers.
Without reinsurance, most life insurance companies simply could not issue the size or many types of policies they issue today.
The business of life reinsurance spans the globe and taps the world’s largest and most sophisticated financial institutions. It is the ultimate business to business exchange.
The report released by IPEC covers 11 life assurance companies, CBZ Life, Evolution, Econet, Fidelity, Getsure, FML, Heritage, Nyaradzo, Old Mutual, ZB Life, Zimnat and three reinsurance companies, Baobab, First Mutual and FBC.
The period under review shows growth momentum for the life assurance industry albeit rising cost outflows.
“We encourage product innovativeness, prudent underwriting and cost management throughout the value chain in order to promote sustainability of the industry despite the prevailing challenges in the operating environment,” said IPEC.
It was also stated that the industry’s total costs grew substantially by 29 percent from $109 million to $140 million fueled by claims.
Resultantly the industry’s combined ratio grew by 10 percent to 79 percent and a technical profit of $37 million was reported compared to that of June 2015 which was $49 million.