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Short-term insurers have recorded a marked drop in annual growth in the volume of business written due to low liquidity levels and depressed industry capacity utilisation. According to the short-term (non-life) insurance report for the quarter ended December 31, 2013 that was released by the Insurance and Pensions Commission, the annual growth rate in gross premium written for short-term insurers was 8,16 percent in 2013 compared to 22,04 percent, 35,51 percent, and 53,04 percent reported in 2012, 2011 and 2010 respectively.

On the other hand, the annual growth rate in net premium written in 2013 was 10,38 percent compared to 21,21 percent, 28,64 percent, and 111,97 percent in 2012, 2011 and 2010 respectively.

“The slowdown in the annual growth rate of the non-life insurance industry may be attributable to challenges such as low liquidity and low industry capacity utilisation that are bedevilling the economy at large,” IPEC said.

IPEC said growth in NPW reported between the year ended 31 December 2009 and 31 December 2013 of 264,83 percent was higher than that recorded in GPW of 173,74 percent, a situation which may be attributable to an increase in risk appetite of non-life insurers over the years.

“This also shows the improvement in the retention capacity of direct non-life insurers following a decade long hyper-inflationary period that had eroded the capacity of many insurers.

“This is confirmed by the increase in the retention ratio from 39,43 percent for the year ended 31 December 2009 to 52,56 percent for the year ended 31 December 2013,” the Commission said.

Motor and fire insurance remained the dominant classes of business accounting for 41,29 percent and 20,91 percent of total gross premium written during the year ended December 31, 2013.

The fastest growing classes of business in terms of GPW were hire purchase and bondsguarantees which recorded increases in gross premium of 60,71 percent and 53,76 percent respectively.

On the other hand, the least performing classes of business in terms of growth in GPW were marine and health insurance, which recorded decreases in GPW of 15,54 percent and 12,50 percent respectively.

The overall distribution of business remained largely unchanged, with only small changes in GPW attributable to the different classes compared to the distribution of business written during the year ended December 31, 2012.

The volume of business written by direct non-life insurers, in terms of both GPW and NPW, had been on an upward trend since the introduction of the multi-currency regime in 2009.

Source : The Herald

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