ZIMBABWE’S life assurance industry recorded 68 % decline in after tax profits to $314,85 million in the nine months to September 2018 compared to $979,27 million during the same period in 2017, the industry regulator has said.
BY FIDELITY MHLANGA
In its sector report for the third quarter, the Insurance, Pensions and Commission (Ipec) said the significant drop in profit was a result of a drop in investment income.
Investment income was down from $934,09 million in the previous year to $253,87 million in 2018.
Gross Premium Written (GPW) reported by direct life assurers for the period under review amounted to $300,69 million, representing growth of 13% from $265,95 million recorded in the comparative period in 2017.
“The bulk of GPW for the nine months ended September 30, 2018 was concentrated in three entities contributing 78,94% of the market share, indicating an oligopoly market structure. The remaining 20,64% was written by eight entities,” Ipec said.
According to the report, assets were concentrated in two players who control 82,99% of the industry’s asset base. These are Old Mutual Life assurance with 73,55% and First Mutual life assurance with 9,29%.The remaining nine life assurance players control 17,01% of the industry assets.
Total claims incurred by the life assurance industry for the nine-month period amounted to $131,99 million, a decrease from $141,59 million for the comparable period in 2017.
Ipec urged players to innovate and develop products that appeal to the changing needs of both the current and prospective policyholders in the wake of rising inflation.
“Players may also consider increasing their foothold in traditional life assurance products through developing affordable micro insurance products that appeal to the unassured lower end of the market.”
Ipec encouraged players to develop new innovative products that are targeted at the low end of the market in the spirit of micro-insurance, to increase premiums from new business and individual life business.
Working capital for the life assurance industry as at September 30, 2018 amounted to $242,15 million.