The life assurance sector saw a massive increase in gross premium written (GPW) in the quarter to March 2023, up 452 percent from the same period in 2022.
This was mainly driven by premium adjustments and new business.
In real terms, GPW increased by 196 percent.
The positive real growth is attributable to premium adjustments in response to inflationary pressures in the operating environment.
Recurring premiums and new business written increased by 123 percent and 160 percent respectively, compared to the previous comparable period in 2022.
The main drivers of growth in GPW were the funeral assurance and group life assurance businesses, which constituted 82 percent of the total premiums.
Funeral assurance was the backbone of the sector, accounting for 69 percent of the total GPW.
Traditional life assurance products, such as term assurance, endowment policies, pure endowment and whole life, accounted for a small proportion of 5 percent of business generated by life insurers.
The Insurance and Pensions Commission (IPEC) said the state of the life assurance sector reflects the low appetite of the market for traditional life assurance products as confidence in the sector remains low.
IPEC has encouraged all life insurers to deploy customer-centric product development that meets needs and restores confidence in the sector.
The regulator also said that uptake of insurance products continues to be depressed, with recurring business contributing about 96 percent of the GPW for the life assurance sector and only 4 percent attributable to new business.
IPEC also added the low GPW generated from new business, which declined from 12 percent reported as of December 31, 2022, reflects the challenges facing the industry due to the volatility in the macroeconomic environment.
In terms of reinsurance, of the $36 billion GPW written by direct Life insurers during the period under review, only $743 million was ceded to reassures, translating to a reassurance ratio of 2 percent.
According to IPEC, the reassurance ratio for the life assurance sector remains low, and the Commission, therefore, calls for industry players to fully embrace reassurance as a risk management tool that plays a critical role in protecting their balance sheets.
The Commission said reassurance is also important in cushioning the balance sheet during periods of high claims.
During the quarter under review, the life assurance sector reported total assets amounting to $451 billion, representing a nominal increase of 64 percent from $275 billion as of December 31, 2022.