Insurance Industry in Zambia _ Performance & Regulatory

Overview

AVANI, Livingstone

12 June 2018

6/12/2018 1Pensions & Insurance Authority

Outline

• Financial Performance – 2017

• Regulatory Reforms

– Prudential regulations (solvency & governance)

– Conduct of business ( fair treatment of policyholders)

– Industry Development & Financial inclusion

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Financial Performance

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5.71%

12.86%14.23%

18.06%

11.16%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

2013 2014 2015 2016 2017

GI _ GWP

Gross Premiums GI GWP rate p.a

Financial Performance

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37%

9%

29%

25%

9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

2013 2014 2015 2016 2017

LIFE - GWP

Life _ GWP GWP rate P.a

Financial Performance

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4.05%4.53%

0.16%

-3.22%

6.19%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

2013 2014 2015 2016 2017

GI_Underwriting Margins

Financial Performance

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25%27%

30%

35%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2013 2014 2015 2016 2017

GI loss ratios ( Gross Claims to GWP)

Financial Performance

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31%

37%

43%46%

41%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2013 2014 2015 2016 2017

Life- Loss Ratio

Financial Performance

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1,014,203,665 1,116,499,004

1,330,607,460 1,514,623,410

1,818,553,227

151,020,987 110,126,938 162,573,734 149,173,992 292,823,550

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

2013 2014 2015 2016 2017

GI _ ASSETS & CAPITAL

TOTAL ASSETS NET ASSETS

Financial Performance

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146 146137

124 121125 126.9 123.1 120.4

233.6

0

50

100

150

200

250

2013 2014 2015 2016 2017

GI _ DEBTORS & CLAIMS DAYS

Debtor Turnover Days Claims Turnover days

Financial Performance

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105,738,237 126,264,941

172,788,099 197,055,237

253,837,256

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

2013 2014 2015 2016 2017

LIFE _ Net Assets

Financial Performance

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41.237.3

42.045.5

42.246.4

25.1

18.8 18.6 19.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2013 2014 2015 2016 2017

LIFE _ DEBTORS & CLAIMS DAYS

Life _ Debtor turnover days Claims Turnover days

Regulatory Reforms- Solvency• New solvency rules will address the following

– Flexibility, as provisions will be in regulations as opposed to the main law

– Enhance response to market, credit and liquidity risks. Currently• Real estate is completely admissible ; • Premium in default for 60 days is admissible• Assets held outside the country are inadmissible• Assets are disproportionately discounted (either the asset is in -100%

or out- 100%, and No value in between )

– Respond to risks associated with the following• Measurement/Estimation risk in liabilities & reserves• type and volume of insurance • Quality of re-insurance

• Introduce specific penalties for late submission of financial reports (included the Bill)

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Regulatory Reforms- Governance• Governance Regulations will likely address the following

concerns– No limit on ownership or control by any one person– Position of chairman & CEO can be held by one person– Board of directors with unbalanced skills set– Any number of directors is acceptable– Clarity on the number boards any one person can serve– Lack of guidance on independence directors – No requirements for Committees in respect of audit , risk mgt,

etc– ERM and Internal control systems are not mandatory– Managers combining too many operational roles ( e.g Head of

underwriting , claims and re-insurance vested in one person)

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Regulatory Reforms- conduct of business

• Regulations will , at the minimum, aim to address the following

– Disclosure requirements (key facts statements) pre-sale and at the point of sale.

– Premium management (addressed in the Bill)

– Standards on settlement of claims

– Guideline on internal dispute resolution

– Power to the Authority to prescribe administrative penalties

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Regulatory Reforms- Industry Development

• Regulations will aim to address the following – Promote utilization of local capacity.– Specify how to monitor and enforce provisions limiting the

placing of insurance within Zambia (e.g transport, engineering )

• Enhancing the scope of mandatory insurance ( the best approach is to involve stakeholders beyond the Insurance industry)

• Microinsurance Regulations • Caution – Regulations must work with other

interventions (e.g adequate capacity, demand stimulation, Government support) to assure that industry development will take place.

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Thank You

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