Life assurers urged to modernise operations

THE Insurance and Pensions Commission (Ipec) says life assurers in Zimbabwe should deploy product development that leverages on modern technology to improve their products’ relevance.
In its latest report on the sector, the regulator revealed that traditional life assurance products, which include term assurance, endowment policies, pure endowment, and whole life, accounted for only 10 percent of business generated by life assurers.
It said this reflects a low appetite for traditional life assurance products by the market as confidence in the sector remains low.
“The commission encourages all life assurers to deploy customer-centric product development that leverages modern technology to redesign their products in line with customer expectations in terms of relevance and value preservation,” Ipec said.
The life assurer’s inflation-adjusted gross premium written (GPW) was up by seven percent to $17,7 billion in 2022, from $16,5 billion in the prior year’s comparative period.
The growth in GWP was driven by premium adjustments in response to inflation developments as opposed to new business. Premium adjustments were above the December 2022 year-on-year rate of inflation of 243,8 percent.
“The main drivers of growth in GPW were the funeral assurance and group life assurance business, which contributed 90 percent of the total premium,” Ipec said.
The GPW for life reassurers increased by 12 percent to $660,6 million from $589,1 million.
The life assurance sector reported foreign currency business amounting to US$23,2 million, with the funeral assurance business being the major contributor, with one entity writing 50 percent of the business.
The foreign currency business for the life reassurance sector for the year amounted to US$2,5 million.
During the year under review, all the life assurance companies that submitted their returns and all four life reassurance companies reported capital positions that were compliant with the prescribed minimum capital requirements (MCR) of $75 million and $112,5 million.
In terms of assets, direct life assurers reported a 28 percent nominal growth in total assets to $274,8 billion, with the growth mainly attributed to revaluation gains derived from investment properties and investments in gold coins. The asset base for composite reassurers grew by 24 percent to $10,5 billion.
As of December 31, 2022, the average prescribed asset ratio for life assurers and life reassurers stood at 11,25 percent and 10,98 percent, respectively.
The life assurance sector reported a nominal profit after tax of negative $276,6 billion for the year, representing a 969 percent decrease from the $31,7 billion reported in 2021.
Profit after tax for life reassurers increased by 250 percent to $3,3 billion for the period under review from $950,6 million recorded in the prior year.
“The increase in profit after tax for life reassurers was mainly attributable to high investment returns from revaluation gains on investment properties, whilst the decrease in the profit after tax for life assurers was due to the increase in underwriting losses, mainly driven by transfers to provisions for investment contracts which stood at $350 billion,” Ipec said.
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