Ten Insurance Companies Operate in Swaziland According to Timetric26 Mar 2013 • by Natalie Aster
The Swazi insurance industry is still in its developmental stages. There are a total of ten insurance companies in Swaziland: six life insurers and four non-life insurers. The Swazi industry is highly concentrated with large companies such as Swaziland Royal Insurance Corporation (SRIC), Old Mutual, Metropolitan, Liberty Life and Momentum Insurance all operational. The industry’s key growth driver is the non-life segment, which accounted for the largest share of 50.8% of the industry’s written premium value in 2012. The Swazi insurance industry is regulated by the Registrar of Insurance and Retirement Funds (RIRF). For low income earners, insurers are promoting micro-insurance products. However, there are many challenges in operating this class insurance, such as inefficient distribution channels. The nation’s over dependence on African Customs Union (SACU) receipts is considered a challenge for the development of the industry.
Rising profitability of non-life insurance companies
The report "The Insurance Industry in Swaziland, Key Trends and Opportunities to 2017" by Timetric states that during the review period, a substantial hike in the net income ratio of non-life insurers was recorded. Indeed, the CAGR grew from 8.9% in 2009 to 41.1% in 2010 and to 42.9% in 2011. Fair value adjustment following a recovery in the global financial markets has been the key growth driver. This trend is expected to continue over the forecast period and will encourage the financially strong insurers to invest in product innovation.
The Insurance Industry in Swaziland, Key Trends and Opportunities to 2017
Published: March, 2013
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Micro-insurance to increase the penetration rates
The Swazi insurance authority has targeted the low income population and is developing a framework to promote micro-insurance. In January 2011, the RIRF commissioned the Centre for Financial Regulation and Inclusion (CENFRI) to conduct research, explore opportunities and determine any challenges the nation’s insurance industry faces. The research focused on the study of market context by taking in to account the social, economic, political and demographic environment. The result was the recommended promotion of micro-insurance due to its low costs and the broadening of clientele it provides, which will ultimately support industry growth.
Dependence on SACU receipts
The Swazi economy is highly dependent on SACU receipts. However, due to a decline in SACU revenues and weaknesses in expenditure controls, Swaziland's economy underwent a severe financial crisis in 2011. The economic slowdown hampered the performance of the insurance industry, which declined from a CAGR of 27.2% in 2010 to 7.3% in 2011. However, higher transfers from the SACU in 2012–2013 have improved the fiscal and external balances and a process of economic recovery has begun. This economic growth is expected to continue over the forecast period and will support the demand for insurance products.
High combined ratio, troubling the non-life insurers
During the review period, the combined ratio of the non-life insurance segment has shown a continuous increase which is a bad sign for the profitability of insurance firms. Expenditure incurred on commissions and expenses is responsible for the high ratio. The combined ratio grew from 92.6% in 2008 and reached 100% in 2012, and is expected to rise further over the forecast period.
More information can be found in the report “The Insurance Industry in Swaziland, Key Trends and Opportunities to 2017” by Timetric.
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