Staff Writer 
THE life assurance sector has recorded a 140 percent increase in foreign currency revenue, reaching US$76,91 million, as policyholders shift from local currency-denominated policies to forex-based one
This significant growth compares to the US$32,1 million recorded during the same period in 2022.
“Given that a substantial portion of the business is recurring, the rise in forex revenue reflects the trend of policyholders opting for foreign currency policies,” stated the Insurance and Pensions Commission (IPEC) in its Life Assurance Sector Report for the nine months ending 30 September 2024.
During the quarter under review, foreign currency revenue accounted for 62 percent of total income, a 17 percent increase from the 45 percent share recorded in the corresponding period of 2023.
According to IPEC, funeral assurance and group life assurance remain the key revenue drivers for the sector, contributing a combined 87 percent of total income.
The life assurance sector reported a combined ratio of 50 percent and a nominal profit before tax of ZiG4,29 billion.
Life reassurers recorded a nominal profit before tax of ZiG40,82 billion, equivalent to US$2,95 million.
However, total assets for direct life assurers decreased by 9 percent, from the US$ equivalent of US$496,14 million as of September 30, 2023 to US$453,38 million for the same date in 2024. IPEC attributed the decline primarily to exchange rate fluctuations.
In contrast, life reassurers reported total assets equivalent to US$10,60 million, a 40 percent increase from the US$7,58 million recorded as of September 30, 2023.
IPEC highlighted that compliance with prescribed asset requirements stood at an average of 13,16 percent for life insurers and 17,69 percent for reassurers, against the statutory minimum of 15 percent of total assets.
“Four direct life insurers and three reassurers met the minimum statutory requirement. This marks an improvement from the same period last year when life insurers averaged 9,33 percent and reassurers 3,25 percent.
Notably, three reassurers exceeded the minimum prescribed asset investments,” stated IPEC.
However, three life assurance companies and three reassurers failed to meet the approved US$-indexed Minimum Capital Requirements (MCR) of US$2 million.
As a result, the regulator advised these entities to create compliance roadmaps to ensure adherence once the regulations are officially gazetted.
Looking ahead, IPEC urged insurance companies to integrate Environmental, Social, and Governance (ESG) principles into their operations to align with global standards and enhance their reputation.
“The regulator will collaborate with the industry to prepare for the adoption of sustainable finance practices.
Furthermore, leveraging Artificial Intelligence tools such as chatbots can significantly enhance customer service and operational efficiency,” IPEC noted.
IPEC also emphasised the importance of prioritising cyber risk protection to safeguard sensitive data and maintain customer trust.
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