VOLUME of business written by direct short-term insurance rose to $109 million for the second quarter ending June compared to $84 million during the same period last year. The upsurge was driven by increases in motor and engineering insurance.
Report by Bernard Mpofu, Chief Business Reporter
In its latest quarterly report, the Insurance and Pension Commission said the number of registered and operational short-term direct insurers decreased to 24 from 26, following voluntary surrender of licence by Suremed Insurance Company and the directive issued to Jupiter Insurance Company to stop writing new business. The number of operational short-term reinsurers remained nine.
The insurance industry has since dollarisation gradually recovered with official figures showing that underwriting profit was up 175,32% to $6,6 million in June 2012 compared to the same period last year.
“Non-life reinsurers, on the other hand, reported total gross premium written of $52,37 million for the six months ended June 30 2012, which compares favourably with $37,75 million that was reported for the six months ended June 30 2011. Notwithstanding the increase in volumes of business underwritten, both direct short-term insurers and reinsurers reported decreases in profitability emanating mainly from unrealised losses from valuation of equities as well as depressed investment income,” reads part of the report.
“There was no significant change in the distribution of business with motor and fire insurance remaining the major sources of business accounting for 40,1% and 20,94% of the total gross premium written during the half-year period under review.”
Cell Insurance Company, Alliance Insurance Company and Nicoz Diamond Insurance Company, according to the report, remained the top three insurers in terms of gross premium written, with market shares of 13,36%, 12,23% and 11,64% respectively.
RM Insurance Company, Alliance Insurance Company and Nicoz Diamond Insurance Company accounted for 13,61%, 13,43% and 12,33% respectively in terms of net premium written business.
The report further showed that total profit after tax for short-term insurers decreased from $7,86 million reported for the half-year ended June 30 2011 to $6,08 million for the half year period under review.
On the other hand, total profit after tax for short-term reinsurers decreased from $4,63 million for the six months ended June 30 2011 to a negative $1,72 million for the six months ended June 30 2012.
“The sector reported an increase in underwriting profits in line with the increased business volumes. The decrease in the overall profits of the sector driven by the loss in the value of shares, given improved underwriting profits shows that the short-term insurance industry is currently highly sensitive to market risk,” the report said.
The insurance regulator said as at June 30 2012, all operational short-term direct insurers and reinsurers, except SFG Insurance Company, had complied with minimum regulatory capital requirements of $300 000.