According to the Insurance and Pension Commission (Ipec) short term insurance report for the fourth quarter, total and gross premium written (GPW) increased by 35,51% to US$158,97 million.
The growth in GPW was driven by the premiums generated from motor and fire insurance, which was at US$33,41 million and US$15,08 million. The insurance industry has been on a recovery path because of macro-economic stability since the inception of the multi-currency regime. There has been an increase on the motor vehicles that are on Zimbabwe’s roads. In 2011, the country spent US$1,365 billion on the importation of motor vehicles.
In the aftermath of hyperinflation, there has been an increase in insurance take up rates with policies rising, although most of them are on minimum covers. In terms of GPW in regional countries, Kenya is on US$670 million, Namibia US$600 million, Zambia US$180 million, Uganda US$100 million and Malawi US$60 million. There is huge potential for Zimbabwe’s insurance because at its peak level it had GPW of US$600 million.
Underwriting profits were back in the positive to US$3,55 million from a loss of US$5,36 million. The average loss ratio at 38,7% was still below the international benchmark of 60%. Out of the 26 direct short term insurers, a total of eight direct short term insurers reported underwriting losses.
The number of operating direct short term insurers was 26. Export Credit Guarantee Corporation and Agricultural Insurance Company remained closed to new business. The commission is finalising the operational modalities of Lloyd’s following its re-admittance into the Zimbabwean market.
The commission also says that of the short term insurers, only two — Jupiter and Suremed — did not meet the regulatory minimum of US$300 000. However, Ipec said that engagements with the two institutions were still ongoing.
Reinsurers reported an increase in total retained profit of US$11, 99 million from a loss position of US$1,69 million. Short term reinsurance reported capital levels, which complied with the capital requirements of US$400 000.
However, New Re and Colonnade Reinsurance reported relatively low capital levels which may constrain the two reinsurers’ scope to write more business. “The two reinsurers should consider increasing their capital levels in view of the imminent upward review of minimum capital levels by the Commission,” says the report.
The average equity to assets ratio increased from 59,49% as at September 30 2011 to 61,20% as at 31 December 2011, a decline in the level of leverage for the reinsurers.
Baobab Reinsurance Company, FMRE Property and Casualty Reinsurance Company, and ZB Reinsurance Company remained the top three short term reinsurers with a combined market share of 63,89% in terms of gross premium written for the year under review. In terms of net premium written, Baobab Reinsurance Company was the market leader with a market share of 28,32% followed by ZB Reinsurance Company and FMRE Property and Casualty Reinsurance Company with market shares of 18,03% and 17,63%, respectively.