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Growing policyholder debt worry PIA

THE Pensions and Insurance Authority (PIA) says it is concerned with the growing policyholder debt as this affects the liquidity of insurance companies causing delays in settlement of claims.

In the financial performance of the pensions and insurance Industries from January 1 to September 30, 2019, communications manager Doreen Kambanganji Silungwe stated that the sector continued to record growth in 2019 despite a slowdown in the economy.

She stated that the pensions industry registered a positive growth in net asset value of K7.70 billion as at September 30, 2019 from K7.60 billion as at June 30, 2019, representing an increase of 1.3 per cent.

She stated that on a year-to-year basis, net assets grew by 5.5 per cent from K7.30 billion at September 30, 2018 to K7.70 billion at September 30, 2019.

“Equally, total investment income increased from K62 million as at 30th June 2019 to K182 million as at 30th September 2019, representing a 93 per cent increase in investment income. This improvement in investment performance is mainly due to exchange gains earned during the period,” she stated.

“However, total pensions scheme membership dropped from 105,778 as at 30th June 2019 to 105,042 as at 30th September, 2019 representing a 0.7 per cent decrease, while active membership grew from 82,116 as at 30th June, 2019 to 82,981 as at 30th September, 2019 representing a 1 per cent increase.”

Silungwe stated that the pensions industry also recorded a reduction in contributions from K282 million as at June 30, 2019 to K274 million as at September 30, 2019 representing a reduction of 3 per cent as opposed to a 7 per cent increase in the previous quarter.

She stated that refunds of contributions upon members leaving the sponsoring employers increased to K241 million as at September 30, 2019 from K103 million as at June 30, 2019.

“This represents a 31 per cent increase in refunds during the third quarter of 2019. In the insurance industry, insurers also posted positive performance with combined Gross Written Premiums (GWP) of K3.33 billion as at 30th September 2019,” she stated.

“General insurance recorded Gross Written Premium (GWP) of K2.16 billion as at 30th September 2019 from K1.81 billion as at 30th September 2018, representing a growth of 20 per cent over the review period.”

Silungwe stated that in terms of net assets, general insurance business recorded an increase of K379 million as at September 30, 2019 from K374 million as at December 31, 2018, representing a 2 per cent growth.

“ZSIC General had the largest market share at 19 per cent, followed by Professional Insurance at 16 per cent, Mayfair at 14 per cent, Madison General at 12 per cent and NICO Insurance at 10 per cent. The rest of the players accounted for a combined proportion of 29 per cent,” she stated.

“For long term business, GWP as at 30th September 2019, stood at K1.17 billion from K947 million as at 30th September 2018, representing a 23 per cent growth over the review period. Long term insurance business generated K265 million in new business as at 30th September 2019 from K252 million as at 30th September, 2018 representing a 6 per cent increase.”

She stated that in terms of long term insurance market share based on GWP, Sanlam had the largest share of the market at 36 per cent followed by ZISC Life at 14 per cent, Prudential and Madison at 11 per cent each and SES at 8 per cent.

Silungwe stated that the rest of the players accounted for a combined proportion of 20 per cent.

She stated that the pensions and insurance industries also faced some challenges which, included increased delays in remittance of pension contributions, rising insurance claims, poor liquidity and rising policyholder debt.

Silungwe stated that the debt in premiums owed by policyholders to general insurance companies stood at K722 million as at September 30, 2019 as compared to K627 million as at September 30, 2018.

She stated that for 2020 insurance business, the Authority has granted licenses to 317 Insurance entities.

Silungwe stated that of the 317 entities, 26 are insurance companies: 17 general insurance companies and nine are long term insurance companies.

She stated that the Authority has also licensed three reinsurance companies, three reinsurance brokers, 44 brokers, 222 agents and 19 other intermediaries.

Silungwe stated that the authority would continuously monitor and scrutinise the operations of all licensed entities focusing on prudential supervision and market conduct in order to protect the interests of policyholders and beneficiaries.

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