The insurance sector in Mauritius will play an increasing role in providing private pension and insurance plans that definitely provide for the welfare of the nation's citizens during hard times when they are forced to retire from work either through old age or infirmity.
The sector is so important that the authorities are bringing legislation to revamp it in line with major reforms being undertaken in the country's financial sector, whether banking or non-banking. Some of the changes have been revealed by the Financial Services Commission (FSC), the regulatory authority, in its first annual report as follows :
"The new Bill will segregate life an non-life insurance so as to minimise contagion and insolvency risks in the event of company failures. It will address the issues of good corporate governance and internal control systems making it compulsory for the board of directors to manage their business on a sound basis and to address consumer complaints.
The Insurance Bill will go through a consultative process with all stakeholders before being submitted to Parliament."
The FSC also says :"The number of written complaints registered for the period 1 July 2001 to 30 June 2002 is 257 as against 180 for period 1 July 2000 to 30 June 2001."
During investigations of four insurance companies for "suspected noncompliance with the insolvency and statutory reserve requirements of the law, one company was suspended and an administrator was appointed", says the report.
As to the general state of the insurance business in Mauritius, here are extracts of the report :
Overview
The September 11 attacks had serious effects on the insurance and reinsurance industry worldwide. Several large reinsurance companies in Europe and in the USA had to close down as a result of massive claims on property and liabilities by individuals and corporate bodies.
Mauritius has not been insulated by the prevailing higher risks which characterised business. New pressure on the cost of reinsurance rippled worldwide and in Mauritius, sending premium charges up across the industry.
Insurance companies are becoming a segment of the domestic financial sector, offering a variety of insurances ranging from long-term insurance business, such as life insurance, pensions and permanent health insurance, to general business insurance, such as fire, motor, workmen's compensation, employer's liability and miscellaneous insurances.
As at June 30, 2002, 23 insurance companies including three foreign insurers were licensed. Total assets for the period ending June 2001 stood at Rs 23,972 million. There have been new entrants in the industry.
Long-term insurance funds and general insurance amounted to Rs 18,592 million and Rs 523 million respectively as at end June 2001.
Total gross premiums for long-term insurance business amounted to Rs 3,247 million, while gross premiums for insurance business stood at Rs 2,087 million for the period ending June 2001.
Contribution of the sector to the GDP has fluctuated arond an average of 17.7% over the past three years.
The major share of business is affected by three leading groups of companies representing almost 75% of assets, 83% of retained profits, 63% of net worth and 78% of life premiums.
Although the other 20 insurers are competing for the remaining market share, it is expected that the insurance sector in the economy will assume greater importance with enhanced economic activities, riskier job environment and an ageing population.
Total Assets
The insurance sector, as a mjaor component of the financial system, continues to play an important role in the socio-economic development of the country. The total assets of registered insurers which constituted 16.3% of GDP in 1997 have grown to 18.2% of GDP in 2001.
Total assets in 2001 exceeded Rs 23.9 billion, representing an increase of 13.5% over the last year. It is also observed that the total assets of life insurance companies have grown by 29% over the period 1999-2001.
Out of the total assets of Rs 23,972 million in 2001, mortgage loans amount to 23% compared to 25% in 2000.
The share of land and property has decreased from 6% in 1999 to 5% in 2000 and 2001. The share of government securities has increased from 6% in 1999 to 8% in 2001 and that of shares and debentures from 30% in 1999 to 35% in 2000 and 2001.
Long Term Insurance Business
Premium and Investment Income
The gross premium income in respect of long-term insurance increased from Rs 2,770 million in 2000 to Rs 3,247 million in 2001 - an increase of 17%.
Given the long-term nature of life insurance business, income arising from the investment of funds plays an important role. However, we note a decline in investment, which was 51% of the gross premium income in 2000, and 49% in 2001.
Benefits and Payments
Payment of benefits associated with life insurance policies arise in the event of death, disability or survival at specified age or date. It may represent a benefit on maturity or an agreed date under a life insurance policy of a periodical payment under an annuity or pension contract.
We note that total payment of benefits has increased from Rs 1,400 million in 2000 to Rs 1,639 million in 2001, an increase in 17%.
Survival benefits payable under the endowment policies and annuity payments accounted for 72% of the total payments in 2001 as against 71% in 2000. Approximately 6% of the total benefits were paid in repsect of death during the year 2001. The proportion of bonus cashed to total payments has decreased from 12% in 2000 to 11% in 2001.
General Insurance Business
Premium Income
The gross premium income in respect of general insurance business increased from Rs 1,966 million in 2000 to Rs 2,087 million in 2001, representing a growth of 6% compared to 9% in 2000.
The share of fire insurance business remained at the level of 20% of total premium income in 2000 and 2001, while motor insurance business has increased from 44% in 2000 to 45% in 2001.
Miscellaneous accident insurance business comprising several sub-classes has decreased its share of total premium income from 21% in 2000 to 18% in 2001. Transport insurance business is at the level of 9% of total premium income in 2001 as against 8% in 2000. The share of personal accident insurance business in 2001 has increased to 8% from 7% in 2000.
Claims Experience
Claims paid in relation to gross premium provide an indication of the profitability of the business operations. The insured claims amount is arrived at by adding the year-end outstanding claims provision to the actual claims payments made during the year and deducting these from the outstanding claims provision of the previous year. The incurred claims position is thus dependent on the accuracy of the estimates from the outstanding claims.
Considering the different classes of general insurance business altogether, it is noted that the claims ratio has decreased from 59% in 2000 to 53% in 2001. The gross claims ratio in respect of fire insurance business is at 24% in 2001 as against 30% in 2000 and that of miscellaneous insurance business has decreased from 79% in 2000 to 61% in 2001. As regards motor insurance business, the claims ratio has increased from 73% in 2000 to 74% in 2001. Source: Financial News, 24-30th March 2003 |
